tag:blogger.com,1999:blog-46088460233849109592024-03-28T04:49:55.470-07:00Indian ConstitutionConstitution of India, Indian Kanoon, Latest Laws, Landmark Judgments, Live Law & News UpdatesUnknownnoreply@blogger.comBlogger6138125tag:blogger.com,1999:blog-4608846023384910959.post-47978455448129171682023-10-10T10:59:00.005-07:002023-10-10T10:59:41.972-07:00Kamal Prasad & Ors vs State of Madhya Pradesh<div>2023INSC895</div><div>1- [Cr. A No.1578 OF 2012]</div><div>REPORTABLE</div>
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<p style="text-align: justify;"><b><a href="https://www.indianconstitution.in/p/landmark-judgments.html">Landmark Cases</a> of India / </b><span style="text-align: left;"><b><a href="https://www.indianconstitution.in/2021/09/100-100-landmark-cases-of-supreme-court.html">सुप्रीम कोर्ट के ऐतिहासिक फैसले</a></b></span></p>
<div>IN THE SUPREME COURT OF INDIA</div><div>CRIMINAL APPELLATE JURISDICTION</div><div>CRIMINAL APPEAL No.1578 OF 2012</div><div>KAMAL PRASAD & ORS. …APPELLANT(S)</div><div>Versus</div><div>THE STATE OF MADHYA PRADESH</div><div>(NOW STATE OF CHHATTISGARH) …RESPONDENT(S)</div><div>J U D G M E N T</div><div>SANJAY KAROL J.,</div><div>1. This appeal calls into question the correctness of a judgment</div><div>and order passed by the High Court of Chhattisgarh in Criminal</div><div>Appeal No.596 of 1992 by which the guilt of the accused and the</div><div>sentence of imprisonment imposed in Sessions Trial No.198 of</div><div>1988 vide a judgment dated 11.05.1992 stands confirmed.</div><div>2- [Cr. A No.1578 OF 2012]</div><div>2. Challenging their conviction, before us are three convict(s) -</div><div>appellants, namely, Kamal Prasad (A-3); Shersingh (A-6); and</div><div>Bhavdas (A-9).</div><div>3. The convict-appellants stand convicted of having committed</div><div>an offence punishable under Sections 148, 302 read with 149, 307</div><div>read with 149, Indian Penal Code, 18601 and Sections 4/5 of the</div><div>Explosive Substance Act, 1908 under which the sentence awarded</div><div>varies from rigorous imprisonment for 3 years to life</div><div>imprisonment, all to run concurrently.</div><div>BACKGROUND</div><div>4. Facts, as they emerge from the judgments of the Court below</div><div>are:</div><div>4.1 On 17.04.1988 one Chetram was taking his son Kapildeo @</div><div>Guddu to the hospital for treatment with one</div><div>Choubisram (PW-3) as a pillion rider. Upon reaching the</div><div>house of accused Darasram, 11 persons attacked them with</div><div>country made bombs as also Laathis and tabbal. Chetram</div><div>received multiple injuries and eventually succumbed while</div><div>1 For Brevity, “IPC”</div><div>3- [Cr. A No.1578 OF 2012]</div><div>receiving the treatment. PW-3 escaped this attack and took</div><div>shelter in the house of Baisakhu Kewat. Kapildeo, son of</div><div>Chetram, who was being taken to the hospital by his father</div><div>and Chaubisram, was found close to a tree near the place of</div><div>occurrence alive and was taken to a Government Hospital,</div><div>Palari and was shifted to D.K. Hospital, Raipur. However, in</div><div>the course of treatment, he also died, same day at about 4.55</div><div>p.m.</div><div>4.2 Post-mortem examination of the body of the deceased</div><div>Chetram was conducted by Dr. R.P. Pandey (PW-11) and the</div><div>post-mortem examination of Kapildeo was conducted by Dr.</div><div>K.L. Gopawar (PW-10). The police reached the spot of the</div><div>crime at 11.15 a.m. after reading the dehatinalishi recorded</div><div>at 11.00 a.m at the instance of PW-3.</div><div>4.3 The investigation having been conducted by SI Sahid Ali (PW19) revealing the complicity of all 11 accused persons, challan</div><div>was presented before the Court concerned for trial.</div><div>5. The Trial Court, based on the evidence led by the prosecution</div><div>and the accused endeavoring to establish their plea of alibi, finding</div><div>4- [Cr. A No.1578 OF 2012]</div><div>the evidence led by the prosecution to be reliable; the witnesses to</div><div>have established the prosecution case beyond reasonable doubt;</div><div>the witnesses’ testimonies being of sterling quality and their credit,</div><div>unimpeachable, convicted 9 of the 11 accused persons.</div><div>6. In an appeal preferred by the convicts, the findings of fact,</div><div>reasoning adopted, and the judgment of conviction and</div><div>consequent sentence imposed, stands affirmed. The High Court in</div><div>the impugned judgment records as follows:</div><div>“(21.) After due appreciation of these witnesses, it comes</div><div>that firstly two accused persons namely Anandram and</div><div>Kamal threw bombs on the deceased and thereafter the</div><div>other accused persons started assaulting the deceased</div><div>by lathis and tabbal while he fell down on the ground. If</div><div>we examine the conduct of each accused it would appear</div><div>that they had an intention to commit murder of the</div><div>deceased and for that they had made preparation by</div><div>forming an unlawful assembly which is evident from the</div><div>series of events which took place in a sequence when</div><div>firstly two accused threw bombs on the deceased and</div><div>when the. Deceased fell down, all of them attack over</div><div>him with deadly weapons like lathis and tabbal and</div><div>caused multiple injuries to him.”</div><div>7. Counsel for the appellants contended before the High</div><div>Court that since most of the witnesses were close relatives or</div><div>interested witness, hence their testimonies could not be relied</div><div>upon, which contention was not accepted, not only in view of</div><div>5- [Cr. A No.1578 OF 2012]</div><div>the unimpeachable creditworthiness of the witnesses, fully</div><div>inspiring in confidence, but also in the light of principles of law</div><div>enunciated by this Court. On facts, the Court also observed</div><div>that PW-3, is not a relative at all, and Khorbahrin Bai (PW-16)</div><div>although is a relative of the deceased but is not a close relative.</div><div>Also, even though PW-17 is the wife of the deceased, nothing</div><div>elicited prompting her testimony to be unbelievable.</div><div>THE PRESENT APPEAL</div><div>8. Before us, the aforesaid convict-appellants have assailed the</div><div>impugned judgment on four fronts- (a) Inordinate delay in filing of</div><div>the First Information Report (F.I.R.) (Ex.15) introduces to the case,</div><div>the possibility of improvements thereby casting doubt on the</div><div>version of the prosecution; (b) the testimonies of the witnesses of</div><div>the prosecution being contradictory, hence unreliable; (c) the</div><div>deceased being a history-sheeter, having numerous cases pending</div><div>against him, hence equal probability that someone other than the</div><div>convict(s)-appellant(s) favouring and wanting, his elimination;</div><div>and (d) that the accused persons were, in fact, not at the scene of</div><div>the crime and their plea of alibi is probable.</div><div>6- [Cr. A No.1578 OF 2012]</div><div>9. The case of the prosecution rests primarily on the</div><div>testimonies of three witnesses, namely, Choubisram PW-3;</div><div>Khorbahrin Bai PW-16 and Jugbai PW-17.</div><div>10. Here only we may record that the Courts below have</div><div>concurrently found the witnesses to have deposed truthfully, their</div><div>testimonies to be entirely inspiring in confidence.</div><div>11. Further that the death of the deceased Chetram and</div><div>Kapildeo is undisputed, with medical and scientific evidence</div><div>including the post-mortem reports conducted by two doctors</div><div>referred to supra (PW-10 and PW-11), confirm such fact. Deceased</div><div>Chetram having sustained multiple injuries upon vital parts of the</div><div>body as a result of the bombs being thrown at him also stands</div><div>proved.</div><div>12. It is also a matter of record that PW-3 had sustained</div><div>lacerated wounds the causation of which could well have been the</div><div>country made bombs used in the commission of offence. Such fact</div><div>is evident from the medical opinion of Dr. Ghanshyam (PW-20)</div><div>who conducted his medical examination.</div><div>7- [Cr. A No.1578 OF 2012]</div><div>13. Before proceeding to the four contentions advanced, firstly it</div><div>would be necessary for us to appreciate the principles of law in</div><div>respect of delay in registration of FIR as evolved over time.</div><div>13.1 This Court in Apren Joseph v. State of Kerala2,</div><div>has observed that “Undue unreasonable delay in lodging</div><div>the FIR”, “inevitably gives rise to suspicion which puts the</div><div>Court on guard to look for the possible motive and the</div><div>explanation for the delay and consider its effect on the</div><div>trustworthiness or otherwise of the prosecution version.”</div><div>The Bench of three learned Judges further observed that</div><div>no time duration, in the abstract could be fixed as the</div><div>‘reasonable time’ to give information to the police and</div><div>therefore, the same is a question to be determined as per</div><div>facts and circumstances of each case.</div><div>13.2 Further, referring to Ram Jag v. State of U.P.</div><div>3, this</div><div>Court in State of M.P. v. Ratan Singh4 observed that</div><div>Courts when faced with the question of delay in</div><div>registration of FIR are duty-bound to determine whether</div><div>2 (1973) 3 SCC 114</div><div>3 (1974) 4 SCC 201</div><div>4 (2020) 12 SCC 630</div><div>8- [Cr. A No.1578 OF 2012]</div><div>the explanation afforded is plausible enough based on the</div><div>given facts and circumstances of each case.</div><div>13.3 This Court recently in Bhagwan Singh v. Dilip</div><div>Singh alias Depak & Anr5 has observed that if the</div><div>prosecution attempts to ‘improvise its case stage by stage</div><div>and step by step’ during the intervening period, it would</div><div>be open for the accused to contend that the delay was fatal</div><div>to the proceedings and the same was done to ‘stave off</div><div>proceedings against the accused’.</div><div>14. In respect of the first contention put forth by the convictappellants it is seen from the record that the FIR was registered</div><div>about two hours after the incident having taken place on</div><div>17.04.1988 at about 08.00 a.m. The document itself records the</div><div>time of incident as being 8.15 a.m. and the time of report as being</div><div>11.00 a.m. The testimony of PW-3 at whose instance the FIR was</div><div>recorded, shows that out of fear and having sustained numerous</div><div>injuries, he ran from the place of occurrence and hid in the house</div><div>of Baisakhu Kewat and only emerged therefrom two hours later.</div><div>5 2023 SCC OnLine 1059</div><div>9- [Cr. A No.1578 OF 2012]</div><div>In such a situation, delay in filing of the FIR cannot be said to be</div><div>fatal to the case of the prosecution more so in view of the injuries</div><div>sustained by him; the place of occurrence being a remote village</div><div>area and that the version of events was dictated to the police by</div><div>this witness only upon their reaching his place of shelter. To us it</div><div>does not appear to be a case of prior consultation; discussion;</div><div>deliberation or improvements.</div><div>15. Relevant portion of the testimony of PW-3 reads as under:-</div><div>“After 2 hours someone opened the door and I came out</div><div>from the place where I was hiding. Public had assembled</div><div>there. But I cannot tell the names of those persons who</div><div>had assembled. Because I was badly injured and I was</div><div>feeling immense pain. My left eye which was perfectly</div><div>alright before this incident, was completely damaged in</div><div>this incident. Thereafter I dictated report of this incident</div><div>to the station House Officer at the house of Baisakhu.</div><div>First information report was read over to witness and he</div><div>stated that this is the same report which I had dictated.</div><div>First information report marked Ex. P15.”</div><div>16. Significantly, this part of his testimony goes unrefuted. Even</div><div>a suggestion of such statement being false was not given by any</div><div>one of the accused in cross-examination. Having perused the</div><div>same and also the cross-examination forming part of the record,</div><div>we do not find anything emanating therefrom which would</div><div>10- [Cr. A No.1578 OF 2012]</div><div>credibly suggest that the time gap between the occurrence of</div><div>incidence and registration of the FIR is unjustified.</div><div>17. Resultantly, the first contention of the convict appellants</div><div>must necessarily be answered in the negative.</div><div>18. Another defence taken by the convict-appellants is that of</div><div>the plea of alibi. This Court in Binay Kumar Singh v. State of</div><div>Bihar6 has noted the principle as:</div><div>“23. The Latin word alibi means “elsewhere” and that word is</div><div>used for convenience when an accused takes recourse to a</div><div>defence line that when the occurrence took place he was so</div><div>far away from the place of occurrence that it is extremely</div><div>improbable that he would have participated in the crime.”</div><div>19. The principles regarding the plea of alibi, as can be</div><div>appreciated from the various decisions7 of this Court, are:</div><div>19.1 It is not part of the General Exceptions under the</div><div>IPC and is instead a rule of evidence under Section</div><div>11 of the Indian Evidence Act, 1872.</div><div>6 (1997) 1 SCC 283</div><div>7 Dhananjoy Chatterjee v. State of W.B., (1994) 2 SCC 220; Binay Kumar Singh (supra)</div><div>Jitender Kumar v. State of Haryana (2012) 6 SCC 204; Vijay Pal v. State (Govt. of NCT of</div><div>Delhi) (2015) 4 SCC 749; Darshan Singh v. State of Punjab (2016) 3 SCC 37; Mukesh v. State</div><div>(NCT of Delhi) (2016) 6 SCC 1; Pappu Tiwari v. State of Jharkhand 2022 SCC OnLine</div><div>SC 109.</div><div>11- [Cr. A No.1578 OF 2012]</div><div>19.2 This plea being taken does not lessen the burden of</div><div>the prosecution to prove that the accused was</div><div>present at the scene of the crime and had</div><div>participated therein.</div><div>19.3 Such plea is only to be considered subsequent to the</div><div>prosecution having discharged, satisfactorily, its</div><div>burden.</div><div>19.4 The burden to establish the plea is on the person</div><div>taking such a plea. The same must be achieved by</div><div>leading cogent and satisfactory evidence.</div><div>19.5 It is required to be proved with certainty so as to</div><div>completely exclude the possibility of the presence of</div><div>the accused at the spot of the crime. In other words,</div><div>a standard of ‘strict scrutiny’ is required when such</div><div>a plea is taken.</div><div>20. We notice that the defendants have laid certain evidence</div><div>attempting to indicate their presence being at a place other than</div><div>the spot of commission of the offence. The statements of four</div><div>witnesses, namely, Sonchand DW-1; Jageshwar Prasad DW-2;</div><div>12- [Cr. A No.1578 OF 2012]</div><div>Ramadheen DW-3; and Parsu Das DW-4 form part of record.</div><div>However, DW-3 testifies to the whereabouts of accused Sandas</div><div>and DW-4 does so for accused Anand Ram, both of whom the</div><div>present case does not concern as the appellants before us are</div><div>Kamal Prasad (A-3), Shersingh (A-6) and Bhavdas (A-9). The two</div><div>relevant defence witnesses for the convict-appellants before us,</div><div>are as under:-</div><div>20.1 DW-1 states that A-9 is his uncle and had come to</div><div>his house to go to Sandi Bazar. When the police came to</div><div>arrest him he mentioned to them that he had just been</div><div>returning from Bhalesur and did not have any relation</div><div>with the offence. He was arrested by the police.</div><div>20.2 DW-2 submitted that on the day of the offence, A-9</div><div>went to the shop run by him at Bhalesur to purchase some</div><div>tea and jaggery. The distance between Bhalesur and</div><div>Sundri is 16 Kilometres.</div><div>21. In our considered view, both these defence witnesses do not</div><div>conclusively establish the plea of alibi, based on the principle of</div><div>preponderance of probability as their statements stand</div><div>13- [Cr. A No.1578 OF 2012]</div><div>unsupported by any other corroborative evidence. Not only that,</div><div>no reason stands explained in such testimony for A-9 having</div><div>travelled from Bhalesur to Sundri in order to go to Sandi Bazar.</div><div>It is a matter of record that A-9 is a resident of Bhalesur where he</div><div>resided with his family. He owned farms in Sundri. The family of</div><div>A-9 was not examined to substantiate the claim of such travel.</div><div>For those reasons, we cannot believe the version testified to by</div><div>DW-1 and DW-2. We also cannot ignore that all 3 primary</div><div>witnesses of the prosecution i.e., PW-3, PW-16, and PW-17 have</div><div>categorically deposed the presence of the convict-appellants at the</div><div>spot of the crime and such a statement could not be shaken in</div><div>cross-examination.</div><div>22. We find that for the plea of alibi to be established, something</div><div>other than a mere ocular statement ought to have been present.</div><div>After all, the prosecution has relied on the statement of</div><div>eyewitnesses to establish its case against the convict-appellants</div><div>leading to the unrefuted conclusion that convict-appellants were</div><div>present on the spot of the crime and had indeed caused injuries</div><div>unto the deceased as also PW-3 with Lathis and Tabbal on various</div><div>and vital parts of their bodies.</div><div>14- [Cr. A No.1578 OF 2012]</div><div>23. As we have hitherto observed, the prosecution case relies</div><div>primarily on 3 witnesses whom, the Courts below have believed</div><div>without exception. It is next urged that there are contradictions in</div><div>the testimonies of three witnesses, hence, it would neither be</div><div>appropriate nor safe to place reliance thereon. Having perused the</div><div>same, we find them to be coherent on material facts such as the</div><div>presence of the accused on the spot of the crime; the death of</div><div>Chetram; a blast having taken place; and the accused being the</div><div>assailants. A perusal thereof reveals PW3 to have categorically</div><div>deposed that Kamal (A3) threw a bomb on him and deceased</div><div>Chetram. He also stated the other two accused Shersingh (A6) and</div><div>Bhavdas (A9) were also present at that time. PW16 has named all</div><div>three accused persons, attributing upon them the act of hitting the</div><div>deceased with shovels and lathis and further stated that accused</div><div>Kamal hurled abuses at the said witness and the others present</div><div>alongside, prompting them to run away from that place. She,</div><div>however, does not ascribe particular roles to any of the accused as</div><div>to who had hit the deceased with a lathi or who did so with a</div><div>showel. Jugbai PW-17 deposed that the three accused before us,</div><div>as well as others had lathis and shovels with them and they had</div><div>15- [Cr. A No.1578 OF 2012]</div><div>challenged her presence there forcing her to run away. She stated</div><div>that she along with others had witnessed the incident from near</div><div>the house of one Samaru and that she had seen the accused</div><div>beating the deceased. Therefore, we find no force in the contention</div><div>that the testimonies relied on by the prosecution are inherently</div><div>contradictory.</div><div>24. It may be true that the deceased Chetram was a historysheeter and had scores of criminal cases pending against him or</div><div>cases in which he was involved. However, such fact is</div><div>unsubstantiated on record for no detail whatsoever stands</div><div>provided in respect of such cases involving the deceased. Be that</div><div>as it may, simply because the deceased had a chequered past</div><div>which constituted several run-ins with the law, Courts cannot give</div><div>benefit thereof, particularly when such claims are bald assertions,</div><div>to those accused of committing such a person’s murder. And in</div><div>any event, such a plea is merely presumptuous.</div><div>25. In conclusion, we find that the charges levied against the</div><div>accused, i.e., under Sections 148, 302 read with 149, 307 read</div><div>with 149, IPC, and Sections 4/5 of the Explosive Substance Act,</div><div>16- [Cr. A No.1578 OF 2012]</div><div>1908, and the sentence corresponding thereto as awarded by the</div><div>Trial Court and confirmed by the High Court, do not warrant</div><div>interference of this Court. It may also be observed that the</div><div>sentences awarded are in no manner excessive or</div><div>disproportionate to the crimes for which the convict-appellants</div><div>stand convicted.</div><div>26. The appeal, therefore, fails and is accordingly dismissed.</div><div>27. The bail granted by this Court vide order dated 1st October</div><div>2012, stands cancelled. The appellants are directed to surrender</div><div>forthwith. The concerned trial court to take consequential steps.</div><div>28. Pending Interlocutory application(s), if any, shall stand</div><div>disposed of.</div><div> ……………………J.</div><div>(ABHAY S. OKA)</div><div>…..……………….J.</div><div> (SANJAY KAROL)</div><div>Date : 10 October, 2023;</div><div>Place : New Delhi. </div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-11034614624841381192023-10-10T10:57:00.004-07:002023-10-10T10:57:46.185-07:00Siby Thomas vs M/s Somany Ceramics Ltd.<div>2023INSC890</div><div>SLP (Crl.) 12 of 2020 Page 1 of 21</div>
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<p style="text-align: justify;"><b><a href="https://www.indianconstitution.in/p/landmark-judgments.html">Landmark Cases</a> of India / </b><span style="text-align: left;"><b><a href="https://www.indianconstitution.in/2021/09/100-100-landmark-cases-of-supreme-court.html">सुप्रीम कोर्ट के ऐतिहासिक फैसले</a></b></span></p>
<div>Reportable</div><div>IN THE SUPREME COURT OF INDIA</div><div>CRIMINAL APPELLATE JURISDICTION</div><div>Criminal Appeal No. of 2023</div><div>(@Special Leave Petition (Crl.) No.12 of 2020)</div><div>Siby Thomas</div><div>…Appellant</div><div>Versus</div><div>M/s. Somany Ceramics Ltd.</div><div> …Respondent</div><div>J U D G M E N T</div><div>C.T. RAVIKUMAR, J.</div><div>1. Leave granted.</div><div>2. This Appeal by accused No.4 in the complaint filed</div><div>by the respondent herein under Section 138 read with</div><div>Section 141 of the Negotiable Instruments Act, 1881 (for</div><div>short ‘the NI Act’) is directed against the order dated</div><div>06.12.2019 in CRM-M No.52299 of 2019 passed by the</div><div>High Court of Punjab and Haryana at Chandigarh. As per</div><div>SLP (Crl.) 12 of 2020 Page 2 of 21</div><div>the impugned order the High Court declined to quash</div><div>the complaint qua the appellant in exercise of the power</div><div>under Section 482 of the Code of Criminal Procedure (for</div><div>short ‘Cr.PC’).</div><div>3. Heard the learned counsel appearing for the</div><div>petitioner and learned counsel appearing for the</div><div>respondent.</div><div>4. Virtually, the appellant set up twin grounds to seek</div><div>quashment of the complaint against him; firstly, that he</div><div>had resigned from the partnership firm on 28.05.2013</div><div>whereas the cheque in question was issued on</div><div>21.08.2015 and secondly, that the complaint is devoid of</div><div>mandatory averments required to be made in terms of</div><div>sub-Section 1 of Section 141 of the NI Act, as relates him.</div><div>The High Court found that the contention in regard to the</div><div>maintainability of the complaint against the appellant,</div><div>owing to his retirement from the partnership firm prior</div><div>to the issuance of the cheque in question, is a matter of</div><div>SLP (Crl.) 12 of 2020 Page 3 of 21</div><div>evidence and ultimately, the appellant would have to</div><div>lead evidence and prove that fact. Consequently, it was</div><div>held that the complaint could not be rejected qua the</div><div>appellant at the initial stage in exercise of the powers</div><div>under Section 482 Cr.PC.</div><div>5. The learned counsel appearing for the petitioner</div><div>contended that even if it is taken that the factum of his</div><div>retirement from the partnership firm on 28.5.2013 was</div><div>prior to the cheque in question on 21.8.2015 is a matter</div><div>of evidence, the complaint as against the appellant is</div><div>liable to be quashed owing to the absence of mandatory</div><div>averments required to be made in terms of Section 141</div><div>(1) of the NI Act, in the complaint. In other words, it is</div><div>submitted that though the respondent had specified or</div><div>elaborated the role of some of the accused in the</div><div>complaint as relates the appellant averments</div><div>elaborating/specifying his role in the day-to-day affairs</div><div>of the partnership firm much-less mandatorily required</div><div>SLP (Crl.) 12 of 2020 Page 4 of 21</div><div>averments for his prosecution are conspicuously absent</div><div>in the complaint. To drive home the contentions that the</div><div>learned counsel for the appellant drew our attention to</div><div>paragraphs 3 to 6 of the complaint. Learned counsel for</div><div>the appellant relied on the decisions of this Court in</div><div>Anita Malhotra v. Apparel Export Promotion Council &</div><div>Anr.1 and a decision of Two-Judge Bench of this Court in</div><div>Criminal Appeal No. 879 of 2023 titled Ashok</div><div>Shewakramani & Ors. v. State of Andhra Pradesh &</div><div>Anr.2 and connected cases dated 03.08.2023 to buttress</div><div>the said contentions.</div><div>6. Per Contra, learned counsel appearing for the</div><div>respondent would submit that paragraphs 3 and 4 of the</div><div>complaint would reveal that the averments thereunder</div><div>are sufficient to satisfy the mandatory requirement in</div><div>terms of Section 141 of the NI Act, qua the appellant as</div><div>1</div><div>(2012) 1 SCC 520</div><div>2 2023 INSC 692</div><div>SLP (Crl.) 12 of 2020 Page 5 of 21</div><div>well. In order to support his contention the learned</div><div>counsel relied on the decision of a two-Judge Bench of</div><div>this Court in S.P. Mani and Mohan Dairy v. Dr.</div><div>Snehalatha Elangovan3.</div><div>7. In view of the rival contentions as above it is</div><div>apposite to refer to the averments in paragraph 3 and 4</div><div>of the complaint, which is annexed to the SLP. They read</div><div>thus:</div><div>“3. That the accused No.1 is a partnership-firm</div><div>with the name and style of M/s Tile Store, having</div><div>its office at 5-654/B, Jyothis Complex, By-pass</div><div>Road, Eranhipalam, Calicut-673006 (Kerala),</div><div>while accused No.2 to 6 are the partners of the</div><div>accused No.1. The accused No.2 to 6 being the</div><div>partners are responsible for the day to day</div><div>conduct and business of the accused No. 1.</div><div>4.That the accused No.1 through its partners i.e.</div><div>accused No.2 to 6, on the basis of the authority</div><div>vested in them approached to the complainant</div><div>for purchasing the ceramic tiles, sanitary wares</div><div>3 2022 SCC OnLine SC 1238</div><div>SLP (Crl.) 12 of 2020 Page 6 of 21</div><div>and bath fitting from the complainant on credit</div><div>basis. The request of the accused No.1 was</div><div>accepted by the complainant and the accused</div><div>agreed to pay the amount of the goods</div><div>purchased by them to the complainant within</div><div>one month and it was also agreed that if the</div><div>accused failed to make the payment within one</div><div>month in that case they shall also be liable to pay</div><div>interest @ 24% per annum on the balance sale</div><div>consideration till its full realization.”</div><div>(Underline supplied)</div><div>8. As noticed hereinbefore, the parties are at issue</div><div>over the question as to whether the averments in the</div><div>complaint satisfy the requirements under Section 141 (1)</div><div>of the N.I. Act. True that in paragraph 3 it is stated that</div><div>accused No.1 is a partnership firm and accused Nos.2 to</div><div>6 are the partners of accused No.1 and they, being the</div><div>partners, are responsible for the day-to-day contact and</div><div>business of accused No.1. In paragraph 4 what is stated</div><div>is that accused No.1 through its partners i.e., accused</div><div>Nos. 2 to 6, on the basis of the authority vested in them</div><div>SLP (Crl.) 12 of 2020 Page 7 of 21</div><div>approached the complainant for purchasing the ceramic</div><div>tiles, sanitary-wares and bath fittings from the</div><div>complainant on credit basis. Indubitably, besides the</div><div>aforesaid averments no other averments are made in the</div><div>complaint in regard to the appellant’s role. Therefore,</div><div>the question is whether the averments referred to</div><div>hereinbefore are sufficient to prosecute the appellant</div><div>under Section 138 of the NI Act, on the afore-extracted</div><div>averments. We are not oblivious of the fact that the</div><div>appellant has also got a contention that he retired from</div><div>the partnership firm much prior to the issuance of the</div><div>cheque in question. It is only proper and profitable to</div><div>refer to sub-section (1) of Section 141 of the N.I. Act in</div><div>view of the rival contentions. It reads thus:-</div><div>“(1) If the person committing an offence</div><div>under section 138 is a company, every</div><div>person who, at the time the offence was</div><div>committed, was in charge of, and was</div><div>responsible to the company for the conduct</div><div>SLP (Crl.) 12 of 2020 Page 8 of 21</div><div>of the business of the company, as well as</div><div>the company, shall be deemed to be guilty</div><div>of the offence and shall be liable to be</div><div>proceeded against and punished</div><div>accordingly: Provided that nothing</div><div>contained in this sub-section shall render</div><div>any person liable to punishment if he</div><div>proves that the offence was committed</div><div>without his knowledge, or that he had</div><div>exercised all due diligence to prevent the</div><div>commission of such offence: 22 [Provided</div><div>further that where a person is nominated as</div><div>a Director of a company by virtue of his</div><div>holding any office or employment in the</div><div>Central Government or State Government</div><div>or a financial corporation owned or</div><div>controlled by the Central Government or</div><div>the State Government, as the case may be,</div><div>he shall not be liable for prosecution under</div><div>this Chapter.]”</div><div>9. Bearing in mind the averments made in the</div><div>complaint in relation to the role of the appellant and subsection (1) of Section 141, we will have to appreciate the</div><div>SLP (Crl.) 12 of 2020 Page 9 of 21</div><div>rival contentions. Going by the decision relied on by the</div><div>respondent in S.P. Mani’s case (supra) it is the primary</div><div>responsibility of the complainant to make specific</div><div>averments in the complaint, so as to make the accused</div><div>vicariously liable. Relying on paragraph 47(b) of the</div><div>said decision learned counsel appearing for the</div><div>respondent would also submit that the complainant is</div><div>supposed to know only generally as to who were in</div><div>charge of the affairs of the company or firm, as the case</div><div>maybe and he relied on mainly the following recitals</div><div>thereunder:</div><div>“47……</div><div>a.) ……</div><div>b.) The complainant is supposed to know only</div><div>generally as to who were in charge of the affairs</div><div>of the company or firm, as the case may be. The</div><div>other administrative matters would be within the</div><div>special knowledge of the company or the firm</div><div>and those who are in charge of it. In such</div><div>circumstances, the complainant is expected to</div><div>SLP (Crl.) 12 of 2020 Page 10 of 21</div><div>allege that the persons named in the complaint</div><div>are in charge of the affairs of the company/firm.”</div><div>10. We are of the considered view that the respondent</div><div>has misread the said decision. Under the sub-caption</div><div>‘Specific Averments in the complaint’, in paragraph 41</div><div>and sub-paragraphs (a) and (d) as also in paragraph 42</div><div>thereof, it was held in the decision in S.P. Mani’s case</div><div>(supra) thus:-</div><div>“41. In Gunmala Sales Private Limited (supra), this</div><div>Court after an exhaustive review of its earlier</div><div>decisions on Section 141 of the NI Act,</div><div>summarized its conclusion as under:-</div><div>“(a) Once in a complaint filed under</div><div>Section 138 read with Section 141 of the NI</div><div>Act the basic averment is made that the</div><div>Director was in charge of and responsible</div><div>for the conduct of the business of the</div><div>company at the relevant time when the</div><div>offence was committed, the Magistrate can</div><div>issue process against such Director;</div><div>(b) ……</div><div>(c) ……</div><div>SLP (Crl.) 12 of 2020 Page 11 of 21</div><div>(d) No restriction can be placed on the High</div><div>Court’s powers under Section 482 of the</div><div>Code. The High Court always uses and</div><div>must use this power sparingly and with</div><div>great circumspection to prevent inter alia</div><div>the abuse of the process of the Court. There</div><div>are no fixed formulae to be followed by the</div><div>High Court in this regard and the exercise</div><div>of this power depends upon the facts and</div><div>circumstances of each case. The High</div><div>Court at that stage does not conduct a mini</div><div>trial or roving inquiry, but nothing prevents</div><div>it from taking unimpeachable evidence or</div><div>totally acceptable circumstances into</div><div>account which may lead it to conclude that</div><div>no trial is necessary qua a particular</div><div>Director.”</div><div>42. The principles of law and the dictum as laid in</div><div>Gunmala Sales Private Limited (supra), in our</div><div>opinion, still holds the field and reflects the</div><div>correct position of law.”</div><div>11. In the light of the afore-extracted recitals from the</div><div>decision in Gunmala Sales Private Limited v. Anu</div><div>SLP (Crl.) 12 of 2020 Page 12 of 21</div><div>Mehta4</div><div>, quoted with agreement in S.P. Mani’s case</div><div>(supra) and in view of sub-section (1) of Section 141 of</div><div>the N.I. Act it cannot be said that in a complaint filed</div><div>under Section 138 read with Section 141 of the N.I. Act to</div><div>constitute basic averment it is not required to aver that</div><div>the accused concerned is a person who was in charge of</div><div>and responsible for the conduct of the business of the</div><div>company at the relevant time when the offence was</div><div>committed. In paragraph 43 of S.P. Mani’s case (supra)</div><div>it was held thus:</div><div>“43. In the case on hand, we find clear and</div><div>specific averments not in the complaint but also</div><div>in the statutory notice issued to the</div><div>respondent.”</div><div>It is thereafter that in the decision in S.P. Mani’s</div><div>case (supra) in paragraph 47 (a) it was held that the</div><div>primary responsibility of the complainant is to make</div><div>4</div><div>(2015) 1 SCC 103,</div><div>SLP (Crl.) 12 of 2020 Page 13 of 21</div><div>specific averments in the complaint so as to make the</div><div>accused vicariously liable.</div><div>12. Bearing in mind the afore-extracted recitals from</div><div>the decisions in Gunmala Sales Private Limited’s case</div><div>(supra) and S.P. Mani’s case (supra), we have carefully</div><div>gone through the complaint filed by the respondent. It</div><div>is not averred anywhere in the complaint that the</div><div>appellant was in charge of the conduct of the business of</div><div>the company at the relevant time when the offence was</div><div>committed. What is stated in the complaint is only that</div><div>the accused Nos. 2 to 6 being the partners are</div><div>responsible for the day-to-day conduct and business of</div><div>the company. It is also relevant to note that an overall</div><div>reading of the complaint would not disclose any clear</div><div>and specific role of the appellant. In the statutory notice</div><div>dated 10.09.2015 (Annexure-P6) at paragraph 3 it was</div><div>averred thus:-</div><div>SLP (Crl.) 12 of 2020 Page 14 of 21</div><div>“3. That for liquidation of the aforesaid legal</div><div>liability/outstanding, you noticee No. 2 to 6</div><div>issued cheque number 005074 dated</div><div>21.08.2015, amounting to Rs. 27,46,737/- drawn</div><div>on Punjab National Bank, Ernhipalam</div><div>(Kozhikode) branch in favour of my client from</div><div>the account of noticee No. 1.”</div><div>In response to that in Annexure- P7 reply the</div><div>appellant herein stated thus:-</div><div>“In this regard, I would like to convey you</div><div>that, I have retired from M/s Tile store as</div><div>partner way back on 28-5-2013 and I am not</div><div>a partner of M/s. Tile Store any more.</div><div>(Copy of Retirement deed enclosed).</div><div>During the time of my retirement, there</div><div>were no dues to M/s. Somany Ceramics Ltd.</div><div>from M/s. Tile Store as full payments were</div><div>made for the consignments taken from</div><div>them. (Copy of accounts statements up to</div><div>31-05-2013 enclosed)”</div><div>13. In the light of the aforesaid circumstances the</div><div>averments of the respondent in paragraphs 5 and 6 of the</div><div>SLP (Crl.) 12 of 2020 Page 15 of 21</div><div>complaint are also to be seen. In paragraph 5 of the</div><div>complaint, it was alleged that accused No.1 through</div><div>accused No.2 had purchased the goods from the</div><div>complainant on credit basis through proper sales</div><div>invoices and, in paragraph 6 it was alleged that for</div><div>liquidation of legal liability outstanding accused Nos. 2</div><div>and 3 issued cheque Nos. 005074 dated 21.8.2015</div><div>amounting to Rs.27,46,737/- drawn upon Punjab National</div><div>Bank, Ernhipalam (Kozhikode), in favour of the</div><div>complainant from the account of accused No.1. The</div><div>appellant is the accused No. 4 in the complaint.</div><div>14. In view of the factual position relating the</div><div>averments revealed from the complaint as aforesaid it</div><div>is relevant to refer to the decisions relied on by the</div><div>learned counsel appearing for the appellant. In the</div><div>decision in Anita Malhotra’s case (supra) in paragraph</div><div>22 it was held thus:-</div><div>SLP (Crl.) 12 of 2020 Page 16 of 21</div><div>“22. This Court has repeatedly held that in case</div><div>of a Director, the complaint should specifically</div><div>spell out how and in what manner the Director</div><div>was in charge of or was responsible to the</div><div>accused company for conduct of its business and</div><div>mere bald statement that he or she was in charge</div><div>of and was responsible to the company for</div><div>conduct of its business is not sufficient. (Vide</div><div>National Small Industries Corpn. Ltd. v. Harmeet</div><div>Singh Paintal). In the case on hand, particularly,</div><div>in Para 4 of the complaint, except the mere bald</div><div>and cursory statement with regard to the</div><div>appellant, the complainant has not specified her</div><div>role in the day-to-day affairs of the Company.</div><div>We have verified the averments as regards to the</div><div>same and we agree with the contention of Mr.</div><div>Akhil Sibal that except reproduction of the</div><div>statutory requirements the complainant has not</div><div>specified or elaborated the role of the appellant</div><div>in the day-to-day affairs of the Company. On this</div><div>ground also, the appellant is entitled to</div><div>succeed.”</div><div>15. Paragraph 19 of the Ashok Shewakramani’s case</div><div>(supra) is also relevant for the purpose of the case and it,</div><div>in so far as relevant, reads thus:</div><div>SLP (Crl.) 12 of 2020 Page 17 of 21</div><div>“19. Section 141 is an exception to the normal</div><div>rule that there cannot be any vicarious liability</div><div>when it comes to a penal provision. The vicarious</div><div>liability is attracted when the ingredients of subsection 1 of Section 141 are satisfied. The Section</div><div>provides that every person who at the time the</div><div>offence was committed was in charge of, and</div><div>was responsible to the Company for the conduct</div><div>of business of the company, as well as the</div><div>company shall be deemed to be guilty of the</div><div>offence under Section 138 of the NI Act. In the</div><div>light of sub-section 1 of Section 141, we have</div><div>perused the averments made in the complaints</div><div>subject matter of these three appeals. The</div><div>allegation in paragraph 1 of the complaints is</div><div>that the appellants are managing the company</div><div>and are busy with day to day affairs of the</div><div>company. It is further averred that they are also</div><div>in charge of the company and are jointly and</div><div>severally liable for the acts of the accused No.1</div><div>company. The requirement of sub-section 1 of</div><div>Section 141 of the NI Act is something different</div><div>and higher. Every person who is sought to be</div><div>roped in by virtue of sub-section 1 of Section 141</div><div>NI Act must be a person who at the time the</div><div>offence was committed was in charge of and was</div><div>SLP (Crl.) 12 of 2020 Page 18 of 21</div><div>responsible to the company for the conduct of</div><div>the business of the company. Merely because</div><div>somebody is managing the affairs of the</div><div>company, per se, he does not become in charge</div><div>of the conduct of the business of the company or</div><div>the person responsible for the company for the</div><div>conduct of the business of the company. For</div><div>example, in a given case, a manager of a</div><div>company may be managing the business of the</div><div>company. Only on the ground that he is</div><div>managing the business of the company, he</div><div>cannot be roped in based on sub-section 1 of</div><div>Section 141 of the NI Act. The second allegation</div><div>in the complaint is that the appellants are busy</div><div>with the day-to-day affairs of the company. This</div><div>is hardly relevant in the context of subsection 1</div><div>of Section 141 of the NI Act. The allegation that</div><div>they are in charge of the company is neither here</div><div>nor there and by no stretch of the imagination,</div><div>on the basis of such averment, one cannot</div><div>conclude that the allegation of the second</div><div>respondent is that the appellants were also</div><div>responsible to the company for the conduct of</div><div>the business. Only by saying that a person was in</div><div>charge of the company at the time when the</div><div>SLP (Crl.) 12 of 2020 Page 19 of 21</div><div>offence was committed is not sufficient to attract</div><div>sub-section 1 of Section 141 of the NI Act.”</div><div>16. Thus, in the light of the dictum laid down in Ashok</div><div>Shewakramani’s case (supra), it is evident that a</div><div>vicarious liability would be attracted only when the</div><div>ingredients of Section 141(1) of the NI Act, are satisfied.</div><div>It would also reveal that merely because somebody is</div><div>managing the affairs of the company, per se, he would</div><div>not become in charge of the conduct of the business of</div><div>the company or the person responsible to the company</div><div>for the conduct of the business of the company. A bare</div><div>perusal of Section 141(1) of the NI Act, would reveal that</div><div>only that person who, at the time the offence was</div><div>committed, was in charge of and was responsible to the</div><div>company for the conduct of the business of the company,</div><div>as well as the company alone shall be deemed to be</div><div>guilty of the offence and shall be liable to be proceeded</div><div>against and punished. In such circumstances, paragraph</div><div>SLP (Crl.) 12 of 2020 Page 20 of 21</div><div>20 in Ashok Shewakramani’s case (supra) is also</div><div>relevant. After referring to the Section 141(1) of NI Act,</div><div>in paragraph 20 it was further held thus:</div><div>“20 On a plain reading, it is apparent that the</div><div>words "was in charge of" and "was responsible</div><div>to the company for the conduct of the business of</div><div>the company" cannot be read disjunctively and</div><div>the same ought be read conjunctively in view of</div><div>use of the word "and" in between.”</div><div>17. The upshot of the aforesaid discussion is that the</div><div>averments in the complaint filed by the respondent are</div><div>not sufficient to satisfy the mandatory requirements</div><div>under Section 141(1) of the NI Act. Since the averments</div><div>in the complaint are insufficient to attract the provisions</div><div>under Section 141(1) of the NI Act, to create vicarious</div><div>liability upon the appellant, he is entitled to succeed in</div><div>this appeal. We are satisfied that the appellant has made</div><div>out a case for quashing the criminal complaint in relation</div><div>to him, in exercise of the jurisdiction under Section 482</div><div>SLP (Crl.) 12 of 2020 Page 21 of 21</div><div>of Cr.PC. In the result the impugned order is set aside</div><div>and the subject Criminal Complaint filed by the</div><div>respondent and pending before Ld. CJ (JD) JMIC,</div><div>Bahadurgarh, in the matter titled as M/s. Somany</div><div>Ceramics v. M/s. Tile Store etc. vide COMA- 321-2015</div><div>(CNRNO: HRJRA1004637-2015), stand quashed only in</div><div>so far as the appellant, who is accused No. 4, is</div><div>concerned. Appeal stands allowed as above. There will</div><div>be no order as to costs.</div><div>……………………, J.</div><div>(C.T. Ravikumar)</div><div>……………………, J.</div><div> (Sanjay Kumar)</div><div>New Delhi;</div><div>October 10, 2023.</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-15873095156769893322023-10-10T10:54:00.002-07:002023-10-10T10:54:48.560-07:00Dr. Nirmal Singh Panesar vs Mrs. Paramjit Kaur Panesar @ Ajinder Kaur Panesar<div>2023INSC896</div><div>1</div><div><br /></div><div>Dr. Nirmal Singh Panesar vs Mrs. Paramjit Kaur Panesar @ Ajinder Kaur Panesar</div><div><br /></div><div>REPORTABLE</div><div>IN THE SUPREME COURT OF INDIA</div><div>CIVIL APPELLATE JURISDICTION</div><div>CIVIL APPEAL NO.2045 OF 2011</div>
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<p style="text-align: justify;"><b><a href="https://www.indianconstitution.in/p/landmark-judgments.html">Landmark Cases</a> of India / </b><span style="text-align: left;"><b><a href="https://www.indianconstitution.in/2021/09/100-100-landmark-cases-of-supreme-court.html">सुप्रीम कोर्ट के ऐतिहासिक फैसले</a></b></span></p>
<div>DR. NIRMAL SINGH PANESAR …APPELLANT(S)</div><div>VERSUS</div><div>MRS. PARAMJIT KAUR PANESAR @</div><div>AJINDER KAUR PANESAR …RESPONDENT(S)</div><div><br /></div><div>J U D G M E N T</div><div>BELA M. TRIVEDI, J.</div><div>1. “Should the irretrievable breakdown of marriage</div><div>necessarily result in the dissolution of marriage in</div><div>exercise of powers under Article 142 of the</div><div>Constitution of India, when such is not a ground for</div><div>divorce under the Hindu Marriage Act 1955?” - is the</div><div>question posed before us.</div><div>2</div><div>2. The appellant is a qualified doctor, and was</div><div>Commissioned Air Force Officer. He retired on</div><div>30.04.1990 as Wing Commander. The respondent is also a</div><div>qualified teacher, who was working in a Central School,</div><div>and has retired now. The appellant had filed the Divorce</div><div>proceedings on 12.03.1996 before the District Court,</div><div>Chandigarh on two grounds, namely ‘cruelty’ and</div><div>‘desertion’ as contemplated in Section 13(1)(ia) and</div><div>13(1)(ib) respectively of the Hindu Marriage Act 1955</div><div>(hereinafter referred to as the said Act).</div><div>3. The instant appeal is directed against the judgment</div><div>and order dated 18.02.2009 passed by the High Court of</div><div>Punjab and Haryana at Chandigarh in LPA No. 195/2001 in</div><div>FAO No. 44-M/2000 preferred by the appellant-husband,</div><div>whereby the Division Bench of the High Court while</div><div>dismissing the said LPA, had confirmed the judgment and</div><div>decree dated 21.12.2000 passed by the Single Bench in</div><div>the FAO No.44-M of 2000. The said FAO No. 44-M/2000 was</div><div>preferred by the respondent-wife, against the judgment</div><div>and decree dated 05.02.2000 passed by the District</div><div>3</div><div>Judge, Chandigarh (hereinafter referred to as the</div><div>District Court) in HMA No.63 of 1996, which had vide</div><div>the said decree dated 05.02.2000 allowed the HMA filed</div><div>by the appellant-husband, and dissolved the marriage</div><div>between the parties under Section 13 of the said Act.</div><div>4. It is not disputed that the parties had married</div><div>as per the Sikh rites on 10.03.1963 at Amritsar. The</div><div>marriage was consummated and they were blessed with</div><div>three children- two daughters - Harpreet Kaur and</div><div>Rupdaman Kaur (both married now), and one sonKunwarjit Singh Panesar. As per the case of the</div><div>appellant, he was serving in the Indian army and the</div><div>respondent was serving as a teacher in Central School</div><div>in Amritsar. Till January 1984, the relations between</div><div>the parties were normal. The acrimony in their</div><div>relationship appears to have developed when the</div><div>appellant was posted at Madras in January 1984 and the</div><div>respondent did not join him, and preferred to stay</div><div>initially with the parents of the appellant and</div><div>thereafter with her son. Despite sincere efforts</div><div>4</div><div>having been made by the parties, the differences and</div><div>disputes could not be resolved, which ultimately led</div><div>the appellant to file Divorce proceedings in the</div><div>District Court.</div><div>5. As stated hereinabove, the District Court granted</div><div>the decree of divorce, as prayed for by the appellant</div><div>however the Single Bench of the High Court reversed</div><div>the same and the Division Bench of the High Court</div><div>confirmed the judgment and order passed by the Single</div><div>Bench vide the impugned order.</div><div>6. At the outset, it may be stated that both the</div><div>parties are in the late evening of their lives, in as</div><div>much as the appellant is aged about 87 years and the</div><div>respondent is aged about 82 years. The Court</div><div>considering the age of the parties, had expected them</div><div>to sit together and explore the possibility of an</div><div>amicable settlement, however the same having failed,</div><div>the Court had no option but to hear the respective</div><div>learned counsels for the parties on merits.</div><div>5</div><div>7. Mr. Vipin Gogia, the learned advocate appearing</div><div>for the appellant submitted that the High Court had</div><div>committed gross error in reversing the well-reasoned</div><div>decree of divorce granted by the District Court, which</div><div>had concluded that the respondent had treated the</div><div>appellant with cruelty and had deserted the appellant</div><div>without any reasonable cause as alleged in the divorce</div><div>petition. According to him, the acts of the respondent</div><div>in not joining the appellant when he was transferred</div><div>to Madras, and thereafter not taking care of the</div><div>appellant though he had a heart problem, and</div><div>subsequently making complaints to the Air Force</div><div>Authorities against the appellant to malign his image,</div><div>were the acts of “Cruelty,” entitling the appellant to</div><div>a decree of divorce, in view of the decision in case</div><div>of Naveen Kohli vs. Neelu Kohli</div><div>1 . He alternatively submitted</div><div>that the parties are staying separate since the time</div><div>the appellant had filed the Divorce petition in the</div><div>District Court, and that the marriage having been</div><div>1</div><div>(2006) 4 SCC 558</div><div>6</div><div>irretrievably broken down, the Court should exercise</div><div>the powers under Article 142 of the Constitution of</div><div>India and grant a decree of divorce. In this regard,</div><div>he has heavily relied upon the recent decision of the</div><div>Constitution Bench in the case of Shilpa Sailesh vs. Varun</div><div>Sreenivasan</div><div>2 .</div><div>8. Per contra, the learned advocate Ms. Madhurima</div><div>Tatia for the respondent submitted that the respondent</div><div>being an aged lady does not want to die with the stigma</div><div>of a “Divorcee.” According to her, the respondent had</div><div>made all efforts to respect the sacred relationship</div><div>between the parties all through out and is still ready</div><div>to look after the appellant with the assistance of her</div><div>son. Mere long period of separation could not</div><div>tantamount to irretrievable break down of the</div><div>marriage. She lastly submitted that the appellant</div><div>having failed to make out any ground either of cruelty</div><div>or desertion, the Court may not interfere with the</div><div>2 2023 SCC Online SC 544</div><div>7</div><div>concurrent findings recorded by the Single Bench and</div><div>the Division Bench of the High Court in this regard.</div><div>9. We have given anxious thought and consideration</div><div>to the submissions made by the learned advocates for</div><div>the parties in the light of the evidence on record.</div><div>There could not be any disagreement with the</div><div>proposition of law canvassed by the learned counsel</div><div>for the appellant that the allegations of ‘cruelty’</div><div>and ‘desertion’ are legitimate grounds for seeking a</div><div>decree of divorce under Section 13(1) of the said Act.</div><div>It is well accepted proposition that “cruelty” is a</div><div>course or conduct of one party which adversely affects</div><div>the other. The “cruelty” may be mental or physical,</div><div>intentional, or unintentional. This court in Naveen</div><div>Kohli (supra) has summarised the principles of law on</div><div>“cruelty” as under: -</div><div>“46. The principles of law which have been</div><div>crystallised by a series of judgments of this</div><div>Court are recapitulated as under:</div><div>In Sirajmohmedkhan</div><div>Janmohamadkhan v. Hafizunnisa</div><div>Yasinkhan [(1981) 4 SCC 250 : 1981 SCC (Cri)</div><div>829] this Court stated that the concept of</div><div>8</div><div>legal cruelty changes according to the changes</div><div>and advancement of social concept and</div><div>standards of living. With the advancement of</div><div>our social conceptions, this feature has</div><div>obtained legislative recognition, that a</div><div>second marriage is a sufficient ground for</div><div>separate residence and maintenance. Moreover,</div><div>to establish legal cruelty, it is not necessary</div><div>that physical violence should be used.</div><div>Continuous ill-treatment, cessation of marital</div><div>intercourse, studied neglect, indifference on</div><div>the part of the husband, and an assertion on</div><div>the part of the husband that the wife is</div><div>unchaste are all factors which lead to mental</div><div>or legal cruelty.</div><div>47. In Shobha Rani v. Madhukar Reddi [(1988) 1</div><div>SCC 105 : 1988 SCC (Cri) 60] this Court had an</div><div>occasion to examine the concept of cruelty.</div><div>The word “cruelty” has not been defined in the</div><div>Hindu Marriage Act. It has been used in Section</div><div>13(1)(i-a) of the Act in the context of human</div><div>conduct or behaviour in relation to or in</div><div>respect of matrimonial duties or obligations.</div><div>It is a course of conduct of one which is</div><div>adversely affecting the other. The cruelty may</div><div>be mental or physical, intentional or</div><div>unintentional. If it is physical, it is a</div><div>question of fact and degree. If it is mental,</div><div>the enquiry must begin as to the nature of the</div><div>cruel treatment and then as to the impact of</div><div>such treatment on the mind of the spouse.</div><div>Whether it caused reasonable apprehension that</div><div>it would be harmful or injurious to live with</div><div>the other, ultimately, is a matter of inference</div><div>to be drawn by taking into account the nature</div><div>of the conduct and its effect on the</div><div>complaining spouse. There may, however, be</div><div>9</div><div>cases where the conduct complained of itself</div><div>is bad enough and per se unlawful or illegal.</div><div>Then the impact or the injurious effect on the</div><div>other spouse need not be enquired into or</div><div>considered. In such cases, the cruelty will be</div><div>established if the conduct itself is proved or</div><div>admitted. The absence of intention should not</div><div>make any difference in the case, if by ordinary</div><div>sense in human affairs, the act complained of</div><div>could otherwise be regarded as cruelty.</div><div>Intention is not a necessary element in</div><div>cruelty. The relief to the party cannot be</div><div>denied on the ground that there has been no</div><div>deliberate or wilful ill-treatment.</div><div>48. The cruelty alleged may largely depend</div><div>upon the type of life the parties are</div><div>accustomed to or their economic and social</div><div>conditions and their culture and human values</div><div>to which they attach importance. Each case has</div><div>to be decided on its own merits.</div><div>49. ……..</div><div>50. …….</div><div>51. …….</div><div>52. This Court in Savitri Pandey v. Prem</div><div>Chandra Pandey [(2002) 2 SCC 73] stated that</div><div>mental cruelty is the conduct of other spouse</div><div>which causes mental suffering or fear to the</div><div>matrimonial life of the other. “Cruelty”,</div><div>therefore, postulates a treatment of the</div><div>petitioner with such cruelty as to cause a</div><div>reasonable apprehension in his or her mind that</div><div>it would be harmful or injurious for the</div><div>petitioner to live with the other party.</div><div>10</div><div>Cruelty, however, has to be distinguished from</div><div>the ordinary wear and tear of family life. It</div><div>cannot be decided on the basis of the</div><div>sensitivity of the petitioner and has to be</div><div>adjudged on the basis of the course of conduct</div><div>which would, in general, be dangerous for a</div><div>spouse to live with the other.”</div><div>10. The crux of the various decisions of this Court</div><div>on the interpretation of the word “cruelty” is that it</div><div>has to be construed and interpreted considering the</div><div>type of life the parties are accustomed to; or their</div><div>economic and social conditions and their culture and</div><div>human values to which they attach importance. Each</div><div>case has to be decided on its own merits.</div><div>11. Similarly, the law is also well settled as to what</div><div>could be said to be “Desertion” in the divorce</div><div>proceedings filed under Section 13 of the said Act.</div><div>The expression “Desertion” had come up under the</div><div>judicial scrutiny of this Court in BipinChandra</div><div>JaiSinghBai Shah vs. Prabhavati</div><div>3, which was again</div><div>3</div><div> AIR 1957 SC 176</div><div>11</div><div>considered in case of Lachman UtamChand Kirpalani vs.</div><div>Meena alias Mota</div><div>4 . This Court collating the</div><div>observations made in the earlier decisions, stated its</div><div>view as under: -</div><div>“Collating the aforesaid observations, the</div><div>view of this Court may be stated thus: Heavy</div><div>burden lies upon a petitioner who seeks divorce</div><div>on the ground of desertion to prove four</div><div>essential conditions, namely, (1) the factum</div><div>of separation; (2) animus deserendi; (3)</div><div>absence of his or her consent; and (4) absence</div><div>of his or her conduct giving reasonable cause</div><div>to the deserting spouse to leave the</div><div>matrimonial home.”</div><div>12. Recently, in Debananda Tamuli vs. Kakumoni</div><div>Kataky</div><div>5</div><div>, the Court referring the decision in case of</div><div>Lachman UtamChand Kirpalani (supra) observed as</div><div>under: -</div><div>“7. We have given careful consideration to her</div><div>submissions. Firstly, we deal with the issue</div><div>of desertion. The learned counsel appearing</div><div>for the appellant relied upon the decision of</div><div>this Court in Lachman Utamchand Kirpalani</div><div>[Lachman Utamchand Kirpalani v. Meena, (1964)</div><div>4 AIR 1964 SC 40</div><div>5</div><div> (2022) 5 SCC 459</div><div>12</div><div>4 SCR 331 : AIR 1964 SC 40] which has been</div><div>consistently followed in several decisions of</div><div>this Court. The law consistently laid down by</div><div>this Court is that desertion means the</div><div>intentional abandonment of one spouse by the</div><div>other without the consent of the other and</div><div>without a reasonable cause. The deserted</div><div>spouse must prove that there is a factum of</div><div>separation and there is an intention on the</div><div>part of deserting spouse to bring the</div><div>cohabitation to a permanent end. In other</div><div>words, there should be animus deserendi on the</div><div>part of the deserting spouse. There must be an</div><div>absence of consent on the part of the deserted</div><div>spouse and the conduct of the deserted spouse</div><div>should not give a reasonable cause to the</div><div>deserting spouse to leave the matrimonial</div><div>home. The view taken by this Court has been</div><div>incorporated in the Explanation added to subsection (1) of Section 13 by Act 68 of 1976.</div><div>The said Explanation reads thus:</div><div>“13. Divorce. — (1) * * *</div><div>Explanation. —In this sub-section, the</div><div>expression “desertion” means the desertion of</div><div>the petitioner by the other party to the</div><div>marriage without reasonable cause and without</div><div>the consent or against the wish of such party,</div><div>and includes the wilful neglect of the</div><div>petitioner by the other party to the marriage,</div><div>and its grammatical variations and cognate</div><div>expressions shall be construed accordingly.””</div><div>“8. The reasons for a dispute between husband</div><div>and wife are always very complex. Every</div><div>matrimonial dispute is different from another.</div><div>Whether a case of desertion is established or</div><div>13</div><div>not will depend on the peculiar facts of each</div><div>case. It is a matter of drawing an inference</div><div>based on the facts brought on record by way of</div><div>evidence.”</div><div>13. Coming back to the facts of the present case, the</div><div>Single Bench of the High Court holding that the</div><div>appellant-petitioner had failed to prove the grounds</div><div>of “cruelty” and “desertion” as contemplated in</div><div>Section 13(1) of the said Act, had reversed the decree</div><div>of divorce passed by the Trial Court. The Division</div><div>Bench vide the impugned order confirmed the order</div><div>passed by the Single Bench and observed by holding as</div><div>under: -</div><div>“16. Coming now to the facts of the present</div><div>case, it is undisputed that the wife continued</div><div>to live with the husband without any grievance</div><div>for 21 years and gave birth to three children.</div><div>She looked after the children. One daughter</div><div>was married in the year 1984 before separation.</div><div>The grievance put-forward by the husband for</div><div>the first time was that the wife did not join</div><div>him when he was transferred to Madras. The</div><div>parties were settled at Amritsar and lived</div><div>there for 21 years where children and parents</div><div>of the appellant were also living. Case of the</div><div>wife is that the husband got himself</div><div>transferred of his own volition. At this stage</div><div>of life when there were three grown up children</div><div>14</div><div>and the wife had been living with the husband</div><div>for 21 years, if unilateral decision was taken</div><div>by the husband and the wife expressed her</div><div>opposition, could it be held that the wife</div><div>deserted the husband or treated him with</div><div>cruelty. We have already referred to the</div><div>settled principles on the subject. If the wife</div><div>did not agree to have herself transferred to</div><div>Madras, in the given situation, it could not</div><div>be held that the wife wanted to bring</div><div>cohabitation permanently to an end without</div><div>reasonable cause. This did not show any animus</div><div>deserendi nor it could be held that the wife</div><div>was cruel to the husband. Taking an overall</div><div>view of the matter, it cannot be held that the</div><div>view taken by the learned Single Judge is not</div><div>a possible view so as to call for interference</div><div>in an appeal under Letters Patent. The fact</div><div>remains that the wife continued to look after</div><div>the children and arrange their marriages.</div><div>There is nothing to show that the husband made</div><div>any effort to join the wife, who was living in</div><div>the matrimonial home or to look after any of</div><div>the children. The burden of proof is on the</div><div>appellant to prove desertion and cruelty.”</div><div>“17. Learned counsel for the appellant refers</div><div>to Exh.A-8, which is a letter addressed to the</div><div>wife, in response to her representation for</div><div>maintenance. The contents of the letter are as</div><div>under: -</div><div>"2. lt is informed that we have</div><div>tried our best to help you both to</div><div>reconcile in the long-term interest</div><div>of the welfare of the family and</div><div>children. Accordingly, it is learnt</div><div>that Wg Cdr. N.S. Panesar, in good</div><div>faith and on our counsel signed for</div><div>15</div><div>reconciliation. But it seems that</div><div>you are not ready to reconcile even</div><div>in the interest of children. Under</div><div>the circumstances, there is no</div><div>other alternative for this HQ</div><div>except to advice you to redress your</div><div>grievance, if any, in the Court of</div><div>law. However, on moral and</div><div>humanitarian grounds we have</div><div>counselled your husband to continue</div><div>remitting Rs.800/- p.m. till the</div><div>matter is settled to mutual</div><div>satisfaction."</div><div>He also refers to Exh.A-17, which is letter</div><div>written by the son of the appellant, asking</div><div>the appellant to send money to the Court.”</div><div>“18. Next contention raised is that the</div><div>jewellery should not be given to the wife.</div><div>Learned counsel for the appellant suggested</div><div>that a grand-daughter of the appellant should</div><div>visit the appellant, in which case, the</div><div>appellant will have no objection to the</div><div>jewellery being given to the grand daughter.</div><div>Learned counsel for the wife states that the</div><div>grand-daughters will visit the appellant as</div><div>often as possible and also depending on desire</div><div>and attitude of the appellant but not as a</div><div>condition for finding of learned Single Judge</div><div>to be upheld. Finding of learned Single Judge</div><div>in this regard is as under: -</div><div>" ... This is a fit case to hand</div><div>over the jewellery which was given</div><div>to appellant (wife) at the time of</div><div>marriage and thus, l -direct the</div><div>Manager, Bank of Baroda, Sector 22,</div><div>16</div><div>Chandigarh to hand over all the</div><div>jewellery to the appellant lying in</div><div>the locker ... "”</div><div>14. Having regard to the observations made by the</div><div>Single Bench and Division Bench of the High Court, we</div><div>do not propose to take any different view. Suffice it</div><div>to say that the appellant had failed to prove that the</div><div>respondent had treated the appellant with “Cruelty” or</div><div>that the respondent had “Deserted” the petitioner as</div><div>contemplated in Section 13(1)(ia) and 13(1)(ib)</div><div>respectively of the said Act.</div><div>15. This brings us to advert to the submission made</div><div>by the appellant for granting the decree of divorce on</div><div>the ground that the marriage has irretrievably broken</div><div>down. There is no dispute that the parties are staying</div><div>separate since last many years and all the efforts to</div><div>bring them together have failed. Under the</div><div>circumstances one may presume that the marriage is</div><div>emotionally dead and beyond salvation and that there</div><div>is an irretrievable break down of marriage between the</div><div>parties. However, the question is, should the</div><div>17</div><div>irretrievable break down of marriage necessarily</div><div>result into a decree of divorce to be granted under</div><div>Article 142 of the Constitution of India?</div><div>16. Recently, the Constitution Bench of this Court in</div><div>the case of Shilpa Shailesh vs. Varun Sreenivasan (supra)</div><div>while adumbrating the issue with regard to</div><div>irretrievable break down of marriage and passing of</div><div>decree of divorce under Article 142 of the</div><div>Constitution, observed as under: -</div><div>“41. Having said so, we wish to clearly state</div><div>that grant of divorce on the ground of</div><div>irretrievable breakdown of marriage by this</div><div>Court is not a matter of right, but a</div><div>discretion which is to be exercised with great</div><div>care and caution, keeping in mind several</div><div>factors ensuring that ‘complete justice’ is</div><div>done to both parties. It is obvious that this</div><div>Court should be fully convinced and satisfied</div><div>that the marriage is totally unworkable,</div><div>emotionally dead and beyond salvation and,</div><div>therefore, dissolution of marriage is the</div><div>right solution and the only way forward. That</div><div>the marriage has irretrievably broken down is</div><div>to be factually determined and firmly</div><div>established. For this, several factors are to</div><div>be considered such as the period of time the</div><div>parties had cohabited after marriage; when the</div><div>parties had last cohabited; the nature of</div><div>allegations made by the parties against each</div><div>18</div><div>other and their family members; the orders</div><div>passed in the legal proceedings from time to</div><div>time, cumulative impact on the personal</div><div>relationship; whether, and how many attempts</div><div>were made to settle the disputes by</div><div>intervention of the court or through</div><div>mediation, and when the last attempt was made,</div><div>etc. The period of separation should be</div><div>sufficiently long, and anything above six</div><div>years or more will be a relevant factor. But</div><div>these facts have to be evaluated keeping in</div><div>view the economic and social status of the</div><div>parties, including their educational</div><div>qualifications, whether the parties have any</div><div>children, their age, educational</div><div>qualification, and whether the other spouse</div><div>and children are dependent, in which event how</div><div>and in what manner the party seeking divorce</div><div>intends to take care and provide for the spouse</div><div>or the children. Question of custody and</div><div>welfare of minor children, provision for fair</div><div>and adequate alimony for the wife, and economic</div><div>rights of the children and other pending</div><div>matters, if any, are relevant considerations.</div><div>We would not like to codify the factors so as</div><div>to curtail exercise of jurisdiction under</div><div>Article 142(1) of the Constitution of India,</div><div>which is situation specific. Some of the</div><div>factors mentioned can be taken as</div><div>illustrative, and worthy of consideration.</div><div>42-49. ………</div><div>50. In view of the aforesaid discussion, we</div><div>decide this reference by answering the</div><div>questions framed in the following manner:</div><div>(i) The scope and ambit of power and</div><div>jurisdiction of this Court under</div><div>19</div><div>Article 142(1) of the Constitution</div><div>of India.</div><div>This question as to the power and</div><div>jurisdiction of this Court under</div><div>Article 142(1) of the Constitution</div><div>of India is answered in terms of</div><div>paragraphs 8 to 13, inter alia,</div><div>holding that this Court can depart</div><div>from the procedure as well as the</div><div>substantive laws, as long as the</div><div>decision is exercised based on</div><div>considerations of fundamental general</div><div>and specific public policy. While</div><div>deciding whether to exercise</div><div>discretion, this Court must consider</div><div>the substantive provisions as enacted</div><div>and not ignore the same, albeit this</div><div>Court acts as a problem solver by</div><div>balancing out equities between the</div><div>conflicting claims. This power is to</div><div>be exercised in a ‘cause or matter’.</div><div>(ii) In view of, and depending upon</div><div>the findings of this bench on the</div><div>first question, whether this Court,</div><div>while hearing a transfer petition, or</div><div>in any other proceedings, can</div><div>exercise power under</div><div>Article 142(1) of the Constitution,</div><div>in view of the settlement between the</div><div>parties, and grant a decree of</div><div>divorce by mutual consent dispensing</div><div>with the period and the procedure</div><div>prescribed under Section 13-B of the</div><div>Hindu Marriage Act, and also quash</div><div>and dispose of other/connected</div><div>proceedings under the Domestic</div><div>Violence Act, Section 125 of the Cr.</div><div>20</div><div>P.C., or criminal prosecution</div><div>primarily under Section 498-A and</div><div>other provisions of the I.P.C. If the</div><div>answer to this question is in the</div><div>affirmative, in which cases and under</div><div>what circumstances should this Court</div><div>exercise jurisdiction under</div><div>Article 142 of the Constitution of</div><div>India is an ancillary issue to be</div><div>decided.</div><div>In view of our findings on the first</div><div>question, this question has to be</div><div>answered in the affirmative, inter</div><div>alia, holding that this Court, in</div><div>view of settlement between the</div><div>parties, has the discretion to</div><div>dissolve the marriage by passing a</div><div>decree of divorce by mutual consent,</div><div>without being bound by the procedural</div><div>requirement to move the second</div><div>motion. This power should be</div><div>exercised with care and caution,</div><div>keeping in mind the factors stated</div><div>in Amardeep Singh (supra) and Amit</div><div>Kumar (supra). This Court can also,</div><div>in exercise of power under</div><div>Article 142(1) of the Constitution</div><div>of India, quash and set aside other</div><div>proceedings and orders, including</div><div>criminal proceedings.</div><div>iii) Whether this Court can grant</div><div>divorce in exercise of power under</div><div>Article 142(1) of the Constitution</div><div>of India when there is complete and</div><div>irretrievable breakdown of marriage</div><div>in spite of the other spouses</div><div>opposing the prayer?</div><div>21</div><div>This question is also answered in the</div><div>affirmative, inter alia, holding that</div><div>this Court, in exercise of power</div><div>under Article 142(1) of</div><div>the Constitution of India, has the</div><div>discretion to dissolve the marriage</div><div>on the ground of its irretrievable</div><div>breakdown. This discretionary power</div><div>is to be exercised to do ‘complete</div><div>justice’ to the parties, wherein this</div><div>Court is satisfied that the facts</div><div>established show that the marriage</div><div>has completely failed and there is no</div><div>possibility that the parties will</div><div>cohabit together, and continuation of</div><div>the formal legal relationship is</div><div>unjustified. The Court, as a court of</div><div>equity, is required to also balance</div><div>the circumstances and the background</div><div>in which the party opposing the</div><div>dissolution is placed.”</div><div>17. In view of the afore-stated decision of the</div><div>Constitution Bench, there remains no shadow of doubt</div><div>that this Court can depart from the procedure as well</div><div>as the substantive laws, and exercise its discretion</div><div>under Article 142 for dissolving the marriage between</div><div>the parties by balancing out the equities between the</div><div>conflicting claims of the parties, however, such</div><div>discretion should be exercised with great care and</div><div>22</div><div>caution. It has also laid down that this discretionary</div><div>power could be exercised for dissolving the marriage</div><div>on the ground of its irretrievable break down to do</div><div>“complete justice,” though one of the spouses opposes</div><div>the prayer for dissolution of marriage.</div><div>18. However, in our opinion, one should not be</div><div>oblivious to the fact that the institution of marriage</div><div>occupies an important place and plays an important</div><div>role in the society. Despite the increasing trend of</div><div>filing the Divorce proceedings in the courts of law,</div><div>the institution of marriage is still considered to be</div><div>a pious, spiritual, and invaluable emotional life-net</div><div>between the husband and the wife in the Indian society.</div><div>It is governed not only by the letters of law but by</div><div>the social norms as well. So many other relationships</div><div>stem from and thrive on the matrimonial relationships</div><div>in the society. Therefore, it would not be desirable</div><div>to accept the formula of “irretrievable break down of</div><div>marriage” as a strait-jacket formula for the grant of</div><div>23</div><div>relief of divorce under Article 142 of the Constitution</div><div>of India.</div><div>19. So far as the facts of the present case are</div><div>concerned, as stated earlier, the appellant-husband is</div><div>aged about 89 years and respondent-wife is aged about</div><div>82 years. The respondent all throughout her life has</div><div>maintained the sacred relationship since 1963 and has</div><div>taken care of her three children all these years,</div><div>despite the fact that the appellant-husband had</div><div>exhibited total hostility towards them. The respondent</div><div>is still ready and willing to take care of her husband</div><div>and does not wish to leave him alone at this stage of</div><div>life. She has also expressed her sentiments that she</div><div>does not want to die with the stigma of being a</div><div>“divorcee” woman. In contemporary society, it may not</div><div>constitute to be stigma but here we are concerned with</div><div>the respondent’s own sentiment. Under the</div><div>circumstances, considering and respecting the</div><div>sentiments of the respondent wife, the Court is of the</div><div>opinion that exercising the discretion in favour of</div><div>24</div><div>the appellant under Article 142 by dissolving the</div><div>marriage between parties on the ground that the</div><div>marriage has irretrievably broken down, would not be</div><div>doing “complete justice” to the parties, would rather</div><div>be doing injustice to the respondent. In that view of</div><div>the matter, we are not inclined to accept the</div><div>submission of the appellant to dissolve the marriage</div><div>on the ground of irretrievable break down of marriage.</div><div>20. The appeal therefore is dismissed.</div><div><br /></div><div> .………………………………………….J.</div><div> [ANIRUDDHA BOSE]</div><div> ………………………………………. J.</div><div> [BELA M. TRIVEDI]</div><div>NEW DELHI;</div><div>October 10th, 2023</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-90096059762258415732023-06-28T09:43:00.003-07:002023-06-28T09:43:23.326-07:00Davinder Singh Versus State of Punjab<div>Davinder Singh Versus State of Punjab </div><div><br /></div><div><br /></div>
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<p style="text-align: justify;"><b><a href="https://www.indianconstitution.in/p/landmark-judgments.html">Landmark Cases</a> of India / </b><span style="text-align: left;"><b><a href="https://www.indianconstitution.in/2021/09/100-100-landmark-cases-of-supreme-court.html">सुप्रीम कोर्ट के ऐतिहासिक फैसले</a></b></span></p>
<div><br /></div><div>REPORTABLE</div><div>IN THE SUPREME COURT OF INDIA</div><div>CRIMINAL APPELLATE JURISDICTION</div><div>CRIMINAL APPEAL NO. 12 of 2015</div><div>Davinder Singh ... Appellant</div><div>Versus</div><div>State of Punjab ... Respondent</div><div>JUDGEMENT</div><div>M. M. Sundresh, J.</div><div>1. The appellant stood charged and convicted for the offence punishable under</div><div>Sections 376, 452 and 506 of Indian Penal Code 1860, (hereinafter referred to as</div><div>IPC) by the Additional Sessions Judge (Adhoc), Fast Track Court, Amritsar, which</div><div>was confirmed by the High Court of Punjab & Haryana in Criminal Appeal No.</div><div>S.1106 SB of 2003. Seeking to overturn the aforesaid decisions, the present appeal</div><div>is filed.</div><div>BRIEF FACTS:</div><div>2. As per the prosecution version, the appellant came to the residence of the</div><div>prosecutrix and committed the offence punishable under Section 376 IPC,</div><div>brandishing a knife. The brother of the victim namely Pargat Singh came home and</div><div>1</div><div>upon seeing him, the appellant took to his heels. On returning home, PW4, the</div><div>father of the prosecutrix, filed a complaint for quarrel alone as he felt that the</div><div>dignity of his daughter, PW6 was at stake.</div><div>3. After the aforesaid occurrence dated 15.03.2000, the appellant along with the few</div><div>other co-accused persons went to the residence of the uncle of the prosecutrix</div><div>wherein she was temporarily staying anticipating trouble, and exerted threats.</div><div>Accordingly, a complaint was lodged on 13.04.2000 in FIR No.60/2000 under</div><div>Sections 376, 452, 506 IPC.</div><div>4. The learned Additional Sessions Judge (Adhoc), Fast Track Court, Amritsar</div><div>examined ten prosecution witnesses. It is to be noted that the only eye witness,</div><div>who is the brother of the prosecutrix Pargat Singh has not been examined on behalf</div><div>of the prosecution.</div><div>5. The Trial Court and the High Court rendered conviction against appellant under all</div><div>the Sections, with the major punishment of seven years rigorous imprisonment for</div><div>the offence punishable under Section 376 IPC.</div><div>SUBMISSIONS OF THE APPELLANT:</div><div>6. Learned counsel for the appellant submitted that there is no recovery of the weapon</div><div>allegedly used. The non-examination of Pargat Singh would make the case of</div><div>2</div><div>prosecution doubtful. There was no external injury found on the prosecutrix. The</div><div>inordinate delay in filing the complaint has not been taken note of. If PW4 was</div><div>conscious about the reputation of his daughter being tarnished, he would not have</div><div>given the complaint belatedly. At best, it could be a case of a relationship turning</div><div>sour and not approved by the family. The High Court erred in recording that the</div><div>appellant took co-accused persons to the residence of the uncle of the prosecutrix</div><div>to commit the offence punishable under Section 376 IPC, even when it was not the</div><div>case of the prosecution. The fact that the parties have compromised the matter in</div><div>the year 2013 is also to be kept in mind. The High Court being the appellate forum</div><div>has dealt with the matter in a cursory manner without properly analysing the</div><div>evidence on record. Moreover, even the maternal uncle of the prosecutrix namely</div><div>Satnam Singh has not been examined.</div><div>SUBMISSIONS OF THE RESPONDENT:</div><div>7. Learned counsel appearing for the State submitted that the findings being</div><div>concurrent and in the absence of any perversity, there is no need for any</div><div>interference. Subsequent arrangements between the parties will not have any</div><div>bearing and, in any case, it is not permissible under law. Both the Courts have</div><div>rightly relied upon the evidence of PW4 and PW6. In the absence of any enmity or</div><div>motive, the evidence of PW6 has been correctly found favourable.</div><div>3</div><div>DISCUSSION:</div><div>8. The prosecutrix PW6 did not allege that the offence punishable under Section 376</div><div>IPC was committed at her uncle’s residence. Admittedly, there is delay of 28 days</div><div>in giving the complaint. The reasons assigned cannot be accepted as it defies</div><div>reason and logic. If the intention of PW4 was to suppress the occurrence, there is</div><div>no need to give the complaint subsequently. He did give a complaint which was not</div><div>even registered. Strangely, the complaint was given by PW4 who was not present</div><div>on both the occasions. Further, to commit the offence punishable under Section</div><div>376 IPC no sane person would take two accomplices, that too after committing a</div><div>similar offence earlier. The best person to depose would have been the uncle of the</div><div>prosecutrix Satnam Singh. There is no attempt to recover the knife from the</div><div>appellant as it is a specific case of the prosecution that he committed the offence by</div><div>threatening to harm the prosecutrix. The prosecution, for the reasons best known to</div><div>them, has not chosen to examine him as well. PW4 is not the eye-witness. There is</div><div>absolutely no reason as to why the son of PW4, who is incidentally the brother of</div><div>PW6, has not been examined being the sole eye-witness. On the issue of nonexamination of material witness, we wish to place reliance on the decision of this</div><div>Court in Takhaji Hiraji v. Thakore Kubersing Chamansing, (2001) 6 SCC 145,</div><div>“19. So is the case with the criticism levelled by the High Court on the prosecution case</div><div>finding fault therewith for non-examination of independent witnesses. It is true that if a</div><div>material witness, who would unfold the genesis of the incident or an essential part of the</div><div>prosecution case, not convincingly brought to fore otherwise, or where there is a gap or</div><div>infirmity in the prosecution case which could have been supplied or made good by</div><div>4</div><div>examining a witness who though available is not examined, the prosecution case can be</div><div>termed as suffering from a deficiency and withholding of such a material witness would</div><div>oblige the court to draw an adverse inference against the prosecution by holding that if</div><div>the witness would have been examined it would not have supported the prosecution case.</div><div>On the other hand if already overwhelming evidence is available and examination of</div><div>other witnesses would only be a repetition or duplication of the evidence already</div><div>adduced, non-examination of such other witnesses may not be material. In such a case the</div><div>court ought to scrutinise the worth of the evidence adduced. The court of facts must ask</div><div>itself — whether in the facts and circumstances of the case, it was necessary to examine</div><div>such other witness, and if so, whether such witness was available to be examined and yet</div><div>was being withheld from the court. If the answer be positive then only a question of</div><div>drawing an adverse inference may arise. If the witnesses already examined are reliable</div><div>and the testimony coming from their mouth is unimpeachable the court can safely act</div><div>upon it, uninfluenced by the factum of non-examination of other witnesses…”</div><div>9. In Rajesh Yadav v. State of Uttar Pradesh, (2022) 12 SCC 200:</div><div>“Non-examination of witness</div><div>34. A mere non-examination of the witness per se will not vitiate the case of the</div><div>prosecution. It depends upon the quality and not the quantity of the witnesses and its</div><div>importance. If the court is satisfied with the explanation given by the prosecution along</div><div>with the adequacy of the materials sufficient enough to proceed with the trial and convict</div><div>the accused, there cannot be any prejudice. Similarly, if the court is of the view that the</div><div>evidence is not screened and could well be produced by the other side in support of its</div><div>case, no adverse inference can be drawn. Onus is on the part of the party who alleges that</div><div>a witness has not been produced deliberately to prove it.”</div><div>10. The High Court has recorded a wrong factual finding that the offence under</div><div>Section 376 IPC was committed even in the uncle’s residence of PW6 which is not</div><div>even the case spoken by her. The case of the prosecution, as projected, does not</div><div>conform to the degree of probability. There is no doubt that the evidence of the</div><div>prosecutrix will have to be kept at a higher pedestal but then, such a testimony will</div><div>have to satisfy the conscience of the Court. It has to be seen contextually in the</div><div>light of the other evidence available. It does appear that the appellant wanted to</div><div>marry the prosecutrix which was stoutly opposed by her family. We are not willing</div><div>to go into the subsequent compromise made between the parties, which happened</div><div>5</div><div>after the death of PW4. The submission made by the counsel for the appellant</div><div>appears to be probable when pitted against the version of the prosecution.</div><div>11. We wish to quote with profit the following paragraphs of the decision of this Court</div><div>in the case of Rajesh Yadav (Supra), on the approach of the court in appreciating</div><div>the evidence before it,</div><div>“12. Section 3 of the Evidence Act defines “evidence”, broadly divided into oral and</div><div>documentary. “Evidence” under the Act is the means, factor or material, lending a degree</div><div>of probability through a logical inference to the existence of a fact. It is an “adjective</div><div>law” highlighting and aiding substantive law. Thus, it is neither wholly procedural nor</div><div>substantive, though trappings of both could be felt.</div><div>13. The definition of the word “proved” though gives an impression of a mere</div><div>interpretation, in effect, is the heart and soul of the entire Act. This clause, consciously</div><div>speaks of proving a fact by considering the “matters before it”. The importance is to the</div><div>degree of probability in proving a fact through the consideration of the matters before the</div><div>court. What is required for a court to decipher is the existence of a fact and its proof by a</div><div>degree of probability, through a logical influence.</div><div>14. Matters are necessary, concomitant material factors to prove a fact. All evidence</div><div>would be “matters” but not vice versa. In other words, matters could be termed as a genus</div><div>of which evidence would be a species. Matters also add strength to the evidence giving</div><div>adequate ammunition in the Court's sojourn in deciphering the truth. Thus, the definition</div><div>of “matters” is exhaustive, and therefore, much wider than that of “evidence”. However,</div><div>there is a caveat, as the court is not supposed to consider a matter which acquires the</div><div>form of an evidence when it is barred in law. Matters are required for a court to believe in</div><div>the existence of a fact.</div><div>15. Matters do give more discretion and flexibility to the court in deciding the existence</div><div>of a fact. They also include all the classification of evidence such as circumstantial</div><div>evidence, corroborative evidence, derivative evidence, direct evidence, documentary</div><div>evidence, hearsay evidence, indirect evidence, oral evidence, original evidence,</div><div>presumptive evidence, primary evidence, real evidence, secondary evidence, substantive</div><div>evidence, testimonial evidence, etc.</div><div>16. In addition, they supplement the evidence in proving the existence of a fact by</div><div>enhancing the degree of probability. As an exhaustive interpretation has to be given to the</div><div>word “matter”, and for that purpose, the definition of the expression of the words “means</div><div>and includes”, meant to be applied for evidence, has to be imported to that of a “matter”</div><div>as well. Thus, a matter might include such of those which do not fall within the definition</div><div>of Section 3, in the absence of any express bar.</div><div>17. What is important for the court is the conclusion on the basis of existence of a fact by</div><div>analysing the matters before it on the degree of probability. The entire enactment is meant</div><div>to facilitate the court to come to an appropriate conclusion in proving a fact. There are</div><div>two methods by which the court is expected to come to such a decision. The court can</div><div>come to a conclusion on the existence of a fact by merely considering the matters before</div><div>it, in forming an opinion that it does exist. This belief of the court is based upon the</div><div>6</div><div>assessment of the matters before it. Alternatively, the court can consider the said</div><div>existence as probable from the perspective of a prudent man who might act on the</div><div>supposition that it exists. The question as to the choice of the options is best left to the</div><div>court to decide. The said decision might impinge upon the quality of the matters before it.</div><div>18. The word “prudent” has not been defined under the Act. When the court wants to</div><div>consider the second part of the definition clause instead of believing the existence of a</div><div>fact by itself, it is expected to take the role of a prudent man. Such a prudent man has to</div><div>be understood from the point of view of a common man. Therefore, a Judge has to</div><div>transform into a prudent man and assess the existence of a fact after considering the</div><div>matters through that lens instead of a Judge. It is only after undertaking the said exercise</div><div>can he resume his role as a Judge to proceed further in the case.</div><div>19. The aforesaid provision also indicates that the court is concerned with the existence</div><div>of a fact both in issue and relevant, as against a whole testimony. Thus, the concentration</div><div>is on the proof of a fact for which a witness is required. Therefore, a court can appreciate</div><div>and accept the testimony of a witness on a particular issue while rejecting it on others</div><div>since it focuses on an issue of fact to be proved. However, we may hasten to add, the</div><div>evidence of a witness as whole is a matter for the court to decide on the probability of</div><div>proving a fact which is inclusive of the credibility of the witness. Whether an issue is</div><div>concluded or not is also a court's domain.”</div><div>12. If they feel no action was taken after the alleged occurrence and the matter was</div><div>compromised as projected by the prosecution, there would have been other</div><div>independent witnesses as well. The prosecution has not produced any such witness.</div><div>The Courts below have not considered the evidence available on record in the</div><div>proper perspective. They got carried away by the statement made by PW6. The</div><div>evidence would also suggest that PW4 was not willing to give his daughter in</div><div>marriage to the appellant though he was desirous of marrying her. In fact, the First</div><div>Information Report itself speaks about the aforesaid fact.</div><div>13. In view of the foregoing discussion, we have no hesitation in holding that the</div><div>conviction and sentence rendered by the Additional Sessions Judge (Adhoc), Fast</div><div>Track Court, Amritsar in Sessions Case No. 41 of 2002 as confirmed in Criminal</div><div>7</div><div>Appeal No. S.1106 SB of 2003 of the High Court of Punjab & Haryana require to</div><div>be set aside. Accordingly, they are set aside and the appeal stands allowed. The</div><div>appellant is acquitted of all the charges. The bail bond executed stands discharged.</div><div>.……………………….J.</div><div>(SURYA KANT)</div><div> .……………………….J.</div><div>(M. M. SUNDRESH)</div><div>New Delhi, </div><div>June 22, 2023 </div><div>8</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-42583961510600199402023-06-28T09:42:00.001-07:002023-06-28T09:42:16.098-07:00STATE OF PUNJAB VERSUS KEWAL KRISHAN<div>STATE OF PUNJAB VERSUS KEWAL KRISHAN CASE</div><div><br /></div><div>1</div>
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<p style="text-align: justify;"><b><a href="https://www.indianconstitution.in/p/landmark-judgments.html">Landmark Cases</a> of India / </b><span style="text-align: left;"><b><a href="https://www.indianconstitution.in/2021/09/100-100-landmark-cases-of-supreme-court.html">सुप्रीम कोर्ट के ऐतिहासिक फैसले</a></b></span></p>
<div><br /></div><div>REPORTABLE</div><div> IN THE SUPREME COURT OF INDIA</div><div> CRIMINAL APPELLATE JURISDICTION</div><div> CRIMINAL APPEAL NO. 2128/2014</div><div><br /></div><div>STATE OF PUNJAB ..APPELLANT(S)</div><div> VERSUS</div><div>KEWAL KRISHAN ..RESPONDENT(S)</div><div>J U D G M E N T</div><div>1. Counsel for the appellant is present. None</div><div>has appeared for the respondent. The office has</div><div>submitted a report that notice has been served on</div><div>the sole respondent, yet no one has entered</div><div>appearance on his behalf.</div><div>2. We have heard Mr. Mohit Siwach, learned</div><div>counsel for the appellant.</div><div>3. This appeal assails the judgment and order</div><div>of the High Court of Punjab & Haryana (for short</div><div>the High Court) dated 01.05.2012 rendered in</div><div>Criminal Appeal No. 372 of 2002, whereby the</div><div>judgment and order of the trial Court convicting</div><div>and sentencing the respondent (Kewal Krishan)</div><div>under Section 302, IPC has been set aside and the</div><div>2</div><div>appellant (respondent herein) has been acquitted</div><div>of the charges for which he was tried.</div><div>4. The prosecution case rests on evidence in</div><div>respect of following circumstances:</div><div>(a) The deceased was last seen alive in his own</div><div>house in the company of the accused at about 7.00</div><div>p.m. on 10.12.1998 by PW-2.</div><div>(b) Dead body of the deceased with multiple</div><div>injuries was found in his house by PW-6, nephew of</div><div>the deceased, on 12.12.1998 at around 1.00 pm.</div><div>(c) Autopsy conducted on 12.12.1998, at about 4.15</div><div>pm, reflected that death of the deceased could</div><div>have occurred within two days, as a result of</div><div>shock and haemorrhage, due to ante mortem incised</div><div>wounds.</div><div>(d) Accused made an extra-judicial confession</div><div>before P.W-3 on 25.12.1998 and was thereafter</div><div>handed over to the police on the same day.</div><div>(e) Accused made a disclosure to the police on</div><div>25.12.1998 with regard to the place where he hid</div><div>the knife used in the crime, which led to the</div><div>recovery of a Khanjar (knife) (Ex.P-1).</div><div>(f) The autopsy surgeon opined that the incised</div><div>wounds found on deceased’s body could have been</div><div>caused by use of that Khanjar.</div><div>3</div><div>5. The trial Court found those circumstances</div><div>proved and forming a chain so complete as to</div><div>conclusively indicate that it was the accused and</div><div>no one else who committed the murder and thus</div><div>convicted and sentenced the accused accordingly.</div><div>6. Aggrieved by his conviction, the accused</div><div>went in appeal to the High Court.</div><div>7. The High Court noticed that the accused in</div><div>his statement under section 313 of the Code of</div><div>Criminal Procedure, 1973 had denied the</div><div>incriminating circumstances appearing against him</div><div>in the prosecution evidence and had claimed that</div><div>he was arrested on 12.12.1998 itself on false</div><div>implication. Thereafter, the High Court, on a</div><div>careful analysis of the evidence, more</div><div>particularly the statement made by PW-2 that on</div><div>13.12.1998 he had disclosed to the police about</div><div>the involvement of the accused, doubted the date</div><div>of arrest of the appellant (i.e., 25.12.1998), as</div><div>set up by the prosecution, and opined that the</div><div>statement of PW-2 probabilizes the claim of the</div><div>accused that he was arrested on 12.12.1998 itself.</div><div>The High Court found PW-2’s evidence of last seen</div><div>not convincing and reliable inasmuch as if on</div><div>13.12.1998 PW-2 had informed the police about his</div><div>suspicion in respect of the involvement of the</div><div>accused, the police would have arrested the</div><div>4</div><div>accused forthwith and not waited till 25.12.1998.</div><div>But the record indicated that the name of the</div><div>accused came to light for the first time on</div><div>25.12.1998. In these circumstances, the High Court</div><div>found PW-2 unreliable, as being a witness who was</div><div>set up later. Otherwise also, the High Court found</div><div>that last seen circumstance did not conclusively</div><div>point towards the guilt of the accused by</div><div>excluding all hypotheses consistent with his</div><div>innocence, inasmuch as there was a huge time gap</div><div>between the date and time when the deceased was</div><div>last seen in the company of the accused and</div><div>discovery of deceased’s dead body. Further, the</div><div>High Court took note of the circumstance that the</div><div>autopsy conducted on 12.12.1998 at 4.15 pm</div><div>indicated occurence of rigor mortis on lower</div><div>limbs, which suggested that death could have</div><div>occurred within 30 hours of the autopsy, thereby</div><div>throwing open the possibility of death occurring</div><div>much later than at 7.00 pm on 10.11.1998, when the</div><div>deceased was allegedly seen in the company of the</div><div>accused. Taking note of the above and bearing in</div><div>mind that the accused did not reside with the</div><div>deceased and no evidence was led that except the</div><div>accused no one else could have entered the house</div><div>of the deceased in the interregnum, the last seen</div><div>circumstance was found inconclusive.</div><div>5</div><div>8. In respect of the circumstance of recovery</div><div>of the knife, the High Court, firstly, doubted the</div><div>date of arrest, as noticed above, and, secondly,</div><div>noticed that there was no serologist report to</div><div>ascertain whether the knife was stained with human</div><div>blood as to connect it with the crime.</div><div>9. The High Court also discarded the extra</div><div>judicial confession on the ground that there was</div><div>no cogent explanation set out in the prosecution</div><div>evidence to demonstrate as to why the accused</div><div>would make a confession to P.W.3, particularly,</div><div>when the accused had no significant relationship</div><div>with PW-3 and PW-3 could not have helped him. The</div><div>extra judicial confession was also doubted on the</div><div>ground that the date of arrest of the accused</div><div>(i.e., 25.12.1998) appeared doubtful, inasmuch as</div><div>there was a high probability of the accused being</div><div>arrested earlier i.e., 12.12.1998, as claimed by</div><div>him, because from the statement of PW-2 it</div><div>appeared that the police was informed by him on</div><div>13.12.1998 itself in respect of his suspicion</div><div>regarding the involvement of the accused.</div><div>10. After a thorough analysis of the evidence</div><div>as highlighted above, the High Court found that,</div><div>firstly, the incriminating circumstances were not</div><div>proved beyond reasonable doubt and, secondly, they</div><div>6</div><div>did not constitute a chain so complete as to</div><div>conclusively indicate that it was the accused and</div><div>no one else who, in all human probability,</div><div>committed the crime. Consequently, the High Court</div><div>set aside the order of the trial Court and</div><div>acquitted the accused of the charge.</div><div>11. Learned counsel for the State (appellant)</div><div>has submitted that there was no proven enmity of</div><div>the witnesses with the accused. In these</div><div>circumstances, there was no occasion for the High</div><div>Court to doubt the testimony of the prosecution</div><div>witnesses in respect of the incriminating</div><div>circumstances laid out by the prosecution. In such</div><div>a situation there was no justification to reverse</div><div>the conviction recorded by the trial Court. It was</div><div>argued that the deceased was last seen alive,</div><div>having liquor with the accused, in the evening of</div><div>10.12.1998 and thereafter the deceased was not</div><div>seen alive by anyone. The autopsy report</div><div>probabilizes death of the deceased at around the</div><div>same time when he was last seen in the company of</div><div>the accused. In these circumstances, the burden</div><div>was on the accused to prove as to when he left</div><div>company of the deceased. In absence whereof,</div><div>coupled with other circumstances, accused’s</div><div>conviction was justified. Therefore, the High</div><div>Court fell in error by setting aside the judgment</div><div>7</div><div>of the trial Court and acquitting the respondent.</div><div>12. We have considered the submissions of the</div><div>learned counsel for the appellant and have perused</div><div>the record carefully.</div><div>13. Before we proceed further, it would be</div><div>apposite to notice the law as to when it would be</div><div>appropriate for this Court, exercising power under</div><div>Article 136 of the Constitution of India, to</div><div>interfere with an order of acquittal passed by the</div><div>High Court while reversing an order of conviction</div><div>recorded by the Trial Court. The law in this</div><div>regard is well settled. Normally, this Court is</div><div>reluctant to interfere with an order of acquittal.</div><div>But when it appears that the High Court has on an</div><div>absolutely wrong process of reasoning and a</div><div>legally erroneous and perverse approach to the</div><div>facts of the case and ignoring some of the most</div><div>vital facts, acquitted the respondent and the</div><div>order of acquittal passed by the High Court has</div><div>resulted in a grave and substantial miscarriage of</div><div>justice, extraordinary jurisdiction under Article</div><div>136 of the Constitution of India may rightfully be</div><div>exercised (See : State of U.P. v. Sahai, (1982) 1</div><div>SCC 352).</div><div>14. In State of M.P. v. Paltan Mallah, (2005) 3</div><div>SCC 169 reiterating the same view it was observed:</div><div>“8…….. This being an appeal against</div><div>8</div><div>acquittal, this Court would be slow in</div><div>interfering with the findings of the</div><div>High Court, unless there is perverse</div><div>appreciation of the evidence which</div><div>resulted in serious miscarriage of</div><div>justice and if the High Court has taken</div><div>a plausible view this Court would not</div><div>be justified in interfering with the</div><div>acquittal passed in favour of the</div><div>accused and if two views are possible</div><div>and the High Court had chosen one view</div><div>which is just and reasonable, then also</div><div>this Court would be reluctant to</div><div>interfere with the judgment of the High</div><div>Court.”</div><div>15. In a recent decision rendered by this Court</div><div>in Basheera Begam v. Mohd. Ibrahim, (2020) 11 SCC</div><div>174, it was observed:</div><div>“190. ………..Reversal of a judgment and</div><div>order of conviction and acquittal of</div><div>the accused should not ordinarily be</div><div>interfered with unless such</div><div>reversal/acquittal is vitiated by</div><div>perversity. In other words, the court</div><div>might reverse an order of acquittal if</div><div>the court finds that no person properly</div><div>instructed in law could have upon</div><div>9</div><div>analysis of the evidence on record</div><div>found the accused to be “not guilty”.”</div><div>16. In light of the law noticed above, we would</div><div>have to examine, firstly, whether the High Court</div><div>ignored or misread any material piece of evidence</div><div>which has resulted in miscarriage of justice;</div><div>secondly, whether there is any perversity in the</div><div>appreciation of evidence; and, thirdly, whether</div><div>the view taken by the High Court is a plausible</div><div>view.</div><div>17. This is a case based on circumstantial</div><div>evidence. It is trite law that to convict an</div><div>accused on the basis of circumstantial evidence,</div><div>the prosecution must prove beyond reasonable doubt</div><div>each of the incriminating circumstances on which</div><div>it proposes to rely; the circumstance(s) relied</div><div>upon must be of a definite tendency unerringly</div><div>pointing towards accused’s guilt and must form a</div><div>chain so far complete that there is no escape from</div><div>the conclusion that within all human probability</div><div>it is the accused and no one else who had</div><div>committed the crime and they (it) must exclude all</div><div>other hypothesis inconsistent with his guilt and</div><div>consistent with his innocence.</div><div>18. In the instant case, we notice from the</div><div>record that the dead body of the deceased, lying</div><div>in a naked condition in his house, was first</div><div>10</div><div>discovered by PW-6, nephew of the deceased, on</div><div>12.12.1998 at around 1.00 pm. Upon discovery of</div><div>the dead body, on the information provided by PW6, FIR was registered against unknown accused and</div><div>inquest etc. was carried out. What is important is</div><div>that the name of the accused did not surface on</div><div>the record till 25.12.1998, that is when he was</div><div>allegedly handed over to the police by PW-3 upon a</div><div>confession made by him before PW-3. PW-2, the sole</div><div>witness of the last seen circumstance, in his</div><div>deposition in court, stated that he had expressed</div><div>his suspicion in respect of accused’s involvement</div><div>to the police on 13.12.1998. The High Court opined</div><div>that if PW-2 was aware of the last seen</div><div>circumstance and had made such a disclosure, there</div><div>was no reason for the police not to act against</div><div>the accused till 25.12.1998. Therefore, the</div><div>statement of PW-2 in respect of imparting</div><div>knowledge of the last seen circumstance appeared</div><div>doubtful and it appeared that the witness was set</div><div>up to create link evidence. The High Court also</div><div>noticed that the alleged date and time when the</div><div>deceased was last seen alive was at quite a</div><div>distance from the date and time when the deceased</div><div>was found dead. Indisputably the deceased was</div><div>found dead in his own house where the accused did</div><div>not reside. The deceased was allegedly last seen</div><div>11</div><div>alive in the company of the accused in the evening</div><div>at around 7 pm of 10.12.1998 whereas the body of</div><div>the deceased was found 2 days later, on</div><div>12.12.1998. Autopsy report, based on autopsy</div><div>conducted at around 4.15 pm on 12.12.1998, noted</div><div>occurance of rigor mortis in the lower limbs,</div><div>which gives rise to a possibility of death being</div><div>within 30 hours of the autopsy, meaning thereby</div><div>that death might have occurred much after 7 pm of</div><div>10.12.1998. In such circumstances, bearing in mind</div><div>that the deceased was found dead in his own house,</div><div>where the accused did not reside, and there was no</div><div>evidence as to when the accused left the house and</div><div>that no one else could have entered the house in</div><div>the interregnum, other intervening circumstances</div><div>including hand of some third person in the crime</div><div>was not ruled out by the prosecution evidence. For</div><div>the reasons above, we are of the considered view</div><div>that the High Court was justified in doubting the</div><div>testimony of PW-2 and finding the last seen</div><div>circumstance inconclusive in pointing towards the</div><div>guilt of the accused by excluding other hypotheses</div><div>consistent with his innocence.</div><div>19. As regards recovery of the Khanjar (knife)</div><div>is concerned, the same was denied by the accused</div><div>and there was no serologist report to connect it</div><div>with the crime. Therefore, it had very little</div><div>12</div><div>incriminating value to sustain conviction on its</div><div>own basis. Moreover, the High Court, on strength</div><div>of the circumstances appearing in the evidence,</div><div>doubted the date of arrest and, upon consideration</div><div>of the circumstances, accepted the possibility of</div><div>the arrest of the accused being much earlier in</div><div>point of time, as claimed by the accused, than</div><div>what was set up by the prosecution. In such</div><div>circumstances, the recovery, which was made on</div><div>25.12.1998, allegedly on disclosure made by the</div><div>accused on 25.12.1998, becomes doubtful. The view</div><div>of the High Court in this regard cannot be termed</div><div>perverse as to warrant interference by this Court.</div><div>20. Insofar as the evidence of extra judicial</div><div>confession made by the accused is concerned, the</div><div>same was provided by PW-3, a member of the</div><div>Panchayat wherein the deceased resided. Ordinarily</div><div>a person makes a confession either to absolve</div><div>oneself of the burden of guilt or to seek</div><div>protection under the hope that the person to whom</div><div>confession is made would protect him. Normally a</div><div>confession to absolve oneself of the guilt is made</div><div>to a person on whom the confessor reposes</div><div>confidence. The High Court noticed that there was</div><div>no evidence to demonstrate that the accused had</div><div>any prior relations with PW-3 or that the accused</div><div>hoped for, or sought, any help from PW-3 and,</div><div>13</div><div>therefore, made the confession to him. Notably,</div><div>the accused denied making any such confession. For</div><div>the reasons above, including other, which need not</div><div>be put on record, the High Court discarded the</div><div>circumstance of the accused making a confession</div><div>before PW-3 on 25.12.1998. Otherwise also, an</div><div>extra judicial confession is a very weak type of</div><div>evidence and solely on its basis a conviction is</div><div>not ordinarily to be recorded.</div><div>21. The argument of the learned counsel for the</div><div>appellant that since there was no proven enmity</div><div>between the accused and the witnesses therefore</div><div>there was no reason to disbelieve them, would not</div><div>be of much help to the appellant because this is a</div><div>case based on circumstantial evidence. In a case</div><div>based on circumstantial evidence not only do each</div><div>of the incriminating circumstances have to be</div><div>proved beyond reasonable doubt but those</div><div>incriminating circumstances must constitute a</div><div>chain so far complete that there is no escape from</div><div>the conclusion that within all human probability</div><div>it is the accused who has committed the crime and</div><div>further, cumulatively, they must exclude all</div><div>hypotheses consistent with the innocence of the</div><div>accused and inconsistent with his guilt. As we</div><div>have found that the incriminating circumstances</div><div>were not proved beyond reasonable doubt and</div><div>14</div><div>otherwise also the circumstance of last seen was</div><div>inconclusive, in our view, the High Court was</div><div>justified in setting aside the order of conviction</div><div>recorded by the Trial Court.</div><div>22. The argument that the accused has failed to</div><div>discharge his burden under section 106 of the</div><div>Evidence Act and, therefore, his conviction was</div><div>justified is misconceived. Section 106 of the</div><div>Evidence Act does not absolve the prosecution of</div><div>discharging its primary burden of proving the</div><div>prosecution case beyond reasonable doubt. It is</div><div>only when the prosecution has led evidence which,</div><div>if believed, will sustain a conviction, or which</div><div>makes out a prima facie case, the question arises</div><div>of considering facts of which the burden of proof</div><div>would lie upon the accused. (See: Shivaji</div><div>Chintappa Patil v. State of Maharashtra (2021) 5</div><div>SCC 626). Here, as we have discussed above,</div><div>firstly, the incriminating circumstances were not</div><div>proved beyond reasonable doubt and, secondly, they</div><div>do not form a chain so complete from which it</div><div>could be inferred with a degree of certainty that</div><div>it is the accused and no one else who, within all</div><div>human probability, committed the crime. In these</div><div>circumstances, there was no occasion to place</div><div>burden on the accused with the aid of section 106</div><div>of the Evidence Act to prove his innocence or to</div><div>15</div><div>disclose that he parted company of the deceased</div><div>before his murder.</div><div>23. For all the reasons above, while keeping in</div><div>mind that the view taken by the High Court is a</div><div>plausible view and that it was not pointed out</div><div>that any material evidence was ignored or misread,</div><div>we do not find a good reason to interfere with the</div><div>order of acquittal passed by the High Court.</div><div>24. The appeal is accordingly, dismissed.</div><div> ....................J.</div><div> [B.V. NAGARATHNA]</div><div><br /></div><div> ....................J.</div><div> [MANOJ MISRA]</div><div>NEW DELHI,</div><div>JUNE 21, 2023. </div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-2505556298735583372023-06-28T09:40:00.003-07:002023-06-28T09:40:30.262-07:00 BANK OF BARODA & ORS. VERSUS BALJIT SINGH <p> BANK OF BARODA & ORS. VERSUS BALJIT SINGH Case</p><div><br /></div><div><br /></div><div>1</div><div> REPORTABLE</div><div>IN THE SUPREME COURT OF INDIA</div><div>CIVIL APPELLATE JURISDICTION</div><div>CIVIL APPEAL NO(S).624/2017</div><div>BANK OF BARODA & ORS. Appellant(s)</div><div>VERSUS</div><div>BALJIT SINGH Respondent(s)</div><div>J U D G M E N T</div><div>This appeal arises out of a judgment and decree passed</div><div>by the High Court of Punjab and Haryana in RSA No.338 of</div><div>2011 dated 11.12.2015. By the said judgment, the High Court</div><div>has set aside the judgment of the First Appellate Court</div><div>dated 16.12.2009 passed in C.A. No.75 of 2008 and has</div><div>restored the judgment of the Trial Court passed in Original</div><div>Suit No.201 of 2005. Consequently, the relief sought for by</div><div>the respondent in the suit, i.e., declaration and mandatory</div><div>injunction vis-a-vis his appointment in the appellant-Bank</div><div>on compassionate basis has been granted.</div><div>2. Briefly stated, the facts of the case are that the</div><div>respondent’s father who was working in the appellant-Bank,</div><div>died in harness on 16.05.1999. As on that date, the</div><div>appellant-Bank had a Scheme in place for appointment of</div><div>dependents of the deceased employees on compassionate</div><div>2</div><div>grounds which was issued on 18.08.1998.</div><div>3. It is the case of the respondent herein that on the</div><div>death of the respondent’s father in harness, his mother</div><div>made an application for appointment of the respondent on</div><div>compassionate grounds to the post of Peon under the 1998</div><div>Scheme. The said application for compassionate appointment</div><div>was filed on 21.02.2000. During the pendency of the said</div><div>application under consideration, the appellant-Bank</div><div>announced another Scheme for appointment of the dependents</div><div>of deceased employees on compassionate grounds on</div><div>10.03.2004. Be that as it may, four years subsequent to the</div><div>death of his father, another representation on behalf of</div><div>the Respondent was made to the appellant-Bank on 25.03.2004</div><div>in order to bring to the notice of the Bank the fact that</div><div>he had completed his matriculation in March 2004.</div><div>Subsequently, the Bank considered the application of the</div><div>respondent and on 08.06.2004 rejected the same. Being</div><div>aggrieved, the respondent filed the Original Suit seeking</div><div>the relief of declaration and mandatory injunction against</div><div>the Bank. In the said suit, the appellant-Bank filed its</div><div>written statement and after trial, the learned Trial Judge</div><div>decreed the suit and directed that the respondent be</div><div>appointed on compassionate grounds.</div><div>4. Being aggrieved by the judgment and decree dated</div><div>3</div><div>16.10.2008, the appellant-Bank filed an appeal before the</div><div>Court of the Additional District Judge, which by its</div><div>judgment dated 16.12.2009 allowed the appeal and set aside</div><div>the decree of the Trial Court. The respondent, thereafter,</div><div>filed a Regular Second Appeal before the High Court of</div><div>Punjab and Haryana assailing the judgment of the First</div><div>Appellate Court. The High Court, while considering the</div><div>Second Appeal formulated two questions of law but while</div><div>answering the same in substance, considered the questions</div><div>of law together and by the impugned judgment dated</div><div>11.12.2015 set aside the judgment of the First Appellate</div><div>Court and restored the judgment and decree of the Trial</div><div>Court. Hence, this appeal by the appellant-Bank before this</div><div>Court.</div><div>5. We have heard Ms.Praveena Gautam, learned counsel for</div><div>the appellant-Bank and Mr.Himanshu Sharma, learned counsel</div><div>for the respondent and perused the material placed on</div><div>record.</div><div>6. Learned counsel for the appellant made a two-fold</div><div>submission while assailing the judgment of the High Court.</div><div>In the first instance, she submitted that the High Court</div><div>was not right in answering the second question of law in</div><div>favour of the respondent without appreciating the factual</div><div>aspects of the matter. Elaborating the said contention,</div><div>4</div><div>she drew our attention to various clauses of the Scheme</div><div>dated 18.08.1998 which had been issued by the Bank by way</div><div>of a Circular, to contend that the respondent did not</div><div>fulfill the criterion regarding financial status of a</div><div>candidate, within clause (c) of “Important points”, which</div><div>gives the formula to be applied in order to consider the</div><div>case of a candidate for appointment on compassionate basis.</div><div>In this regard, she drew our attention to the application</div><div>made by the respondent disclosing the income of his</div><div>deceased father as well as the income of the family. She</div><div>submitted that having regard to the true position of the</div><div>income of the family, the respondent was not at all</div><div>eligible to be considered for appointment on compassionate</div><div>basis.</div><div>7. She further submitted that the first question of law</div><div>has not at all been considered by the High Court in the</div><div>context of the eligibility of the respondent. Further, our</div><div>attention was drawn to clause ‘A’ regarding the educational</div><div>qualification of the candidate and it was submitted that</div><div>the respondent had not completed his matriculation within a</div><div>period of four years from the date of death of his father</div><div>and hence, was not entitled to be considered for the</div><div>appointment on compassionate basis as a clerk and was over</div><div>qualified to be appointed as a Peon.</div><div>5</div><div>8. In the above backdrop, learned counsel for the</div><div>appellant drew our attention to certain judgments of this</div><div>Court, namely, General Manager (D&PB) and Others vs. Kunti</div><div>Tiwary reported in (2004) 7 SCC 271, Balbir Kaur and</div><div>Another vs. Steel Authority of India Ltd. reported in</div><div>(2000) 6 SCC 493 and N.C. Santhosh vs. State of Karnataka</div><div>reported in (2019) 7 SCC 617 which is a judgment of a Three</div><div>Judge Bench of this Court, to buttress the submission in</div><div>support of the proposition that compassionate appointment</div><div>is an exception to recruitment and that no vested right is</div><div>available to a party to seek compassionate appointment as a</div><div>matter of right. She also submitted that in fact, the suit</div><div>seeking the relief of declaration and mandatory injunction</div><div>as against the appellant-Bank was not maintainable.</div><div>9. Per contra, learned counsel for the respondent</div><div>supported the judgment of the High Court which has restored</div><div>the judgment of the Trial Court and had directed the</div><div>appellant-Bank to consider the case of the respondent on</div><div>compassionate grounds. He brought to our notice, the fact</div><div>that as on the date of the respondent’s father’s death</div><div>i.e., 16.05.1999, the respondent had already passed 8th</div><div>Standard and thereafter, he also acquired his matriculation</div><div>and intimated to the Bank that he had the eligibility to be</div><div>considered for compassionate appointment. He further</div><div>submitted that the application which was filed on</div><div>6</div><div>compassionate basis was filled up by the Bank itself and</div><div>the details stated in the said application were not</div><div>accurate and that the respondent was entitled to be</div><div>considered for an appropriate post in the appellant-Bank.</div><div>10. Learned counsel further submitted that the delay in</div><div>consideration of the respondent’s application, coupled with</div><div>the fact that the rejection of the application without any</div><div>reasoning had caused prejudice to the respondent and that</div><div>there is no merit in the appeal and, therefore, the same</div><div>may be dismissed.</div><div>11. Having heard the learned counsel for the respective</div><div>parties, we find that the following points would arise for</div><div>our consideration: -</div><div>(1) Whether the High Court was justified in setting</div><div>aside the judgment of the First Appellate Court and</div><div>restoring the judgment and decree of the Trial Court</div><div>while answering the questions of law in favour of the</div><div>respondent and against the Bank?</div><div> (2) What order?</div><div>12. It is necessary to reiterate that the appointment of</div><div>a candidate on compassionate basis does not create any</div><div>vested right and that it is only when a candidate is</div><div>covered under all clauses of the Scheme applicable at the</div><div>relevant point of time that he/she could be considered for</div><div>7</div><div>compassionate appointment.</div><div>13. In Balbir Kaur vs. Steel Authority of India Ltd.,</div><div>(supra)it was observed that the family benefit scheme</div><div>assuring monthly payment to the family of deceased employee</div><div>on the facts therein was not a substitute for compassionate</div><div>appointment by the Steel Authority of India – Respondent in</div><div>the said case. The said case proceeds on its own facts.</div><div>The said judgment can be distinguished from the facts of</div><div>the instant case as the 1998 Scheme specifically</div><div>disentitles a candidate for compassionate appointment</div><div>benefit on the application of the formula for calculation</div><div>of monthly income if the same is less than 60% of the total</div><div>emoluments which the deceased was drawing at the time of</div><div>his death. The object is that it is only when a deceased</div><div>employee’s family is in penury and without any source of</div><div>livelihood when the employee died in harness, compassionate</div><div>appointment can be considered. Since appointment on</div><div>compassionate basis is an exception to the general rule for</div><div>appointment by an open invitation, the exception has to be</div><div>resorted to only when the candidate and his family is in</div><div>penury so as to provide immediate succor on the death of</div><div>the employee in harness. The same has been observed in</div><div>General Manager(D&PB) vs. Kunti Tiwary (supra). In</div><div>N.C.Santhosh vs. State of Karnataka(supra) a three Judge</div><div>Bench of this Court reiterated that appointment on</div><div>8</div><div>compassionate basis is a concession and not a right and the</div><div>criteria laid down in the Rules and Schemes applicable must</div><div>be satisfied by all aspirants. Therefore, the case for</div><div>compassionate appointment has to be considered in</div><div>accordance with the prevalent Scheme. Similarly, in State</div><div>of Himachal Pradesh Vs. Shashi Kumar, (supra), this Court</div><div>has observed that compassionate appointment being an</div><div>exception to the general rule, the dependents of deceased</div><div>government employee are made eligible by virtue of the</div><div>policy of compassionate appointment and they must fulfil</div><div>the terms of the policy which are framed by the</div><div>States/Employers.</div><div>14. It is to be noted that in the instant case, the</div><div>respondent filed a suit for declaration and mandatory</div><div>injunction seeking appointment on compassionate basis which</div><div>was decreed by the Trial Court and upheld and affirmed by</div><div>the High Court. In State of Himachal Pradesh vs. Parkash</div><div>Chand reported in (2019) 4 SCC 285, it has been</div><div>categorically held that a direction by a High Court to</div><div>consider cases for compassionate appointment dehors the</div><div>terms of the policy is impermissible as it would amount to</div><div>re-writing the terms of the policy. This aspect has been</div><div>overlooked by the High Court in the instant case. In a</div><div>similar vein, in Indian Bank vs. Promila reported in (2020)</div><div>2 SCC 729, it has been observed that eligibility for</div><div>9</div><div>compassionate appointment must be as per the applicable</div><div>scheme and the courts cannot substitute a scheme or add or</div><div>subtract from the terms thereof in exercise of judicial</div><div>review. The aforesaid dicta would also apply to a suit</div><div>filed seeking the relief of compassionate appointment.</div><div>15. In this regard, reference could be made to the</div><div>judgment of this Court in State of Himachal Pradesh vs.</div><div>Shashi Kumar reported in (2019) 3 SCC 653 wherein at</div><div>Paragraphs 18-19 the aforesaid terms have been clearly</div><div>stated.</div><div>16. Therefore, it is necessary to consider the Scheme</div><div>which is applicable to the respondent in the instant case.</div><div>It is not in dispute between the parties that the Scheme</div><div>dated 18.09.1998 which has been issued by way of a Circular</div><div>is applicable to the case of the respondent. Under the</div><div>said Scheme, both the educational qualification as well as</div><div>qualification vis-a-vis the income of the candidate making</div><div>an application for compassionate appointment have been</div><div>prescribed and they are to be considered by the employer.</div><div>In this context, it would be useful to refer the judgment</div><div>of the High Court which has raised two questions of law</div><div>which are as follows:</div><div>i) Whether the case of the appellant can be considered</div><div>10</div><div>for compassionate employment vis-a-vis the Scheme</div><div>which was in vogue at the time when Balbir Singh died</div><div>or subsequent to that?</div><div>ii) Whether advancement of family pension can be the</div><div>ground for non-suiting the case of compassionate</div><div>employment?</div><div>17. While answering the second question, the High Court</div><div>has referred to a judgment of the Rajasthan High Court in</div><div>Mohd. Farooq Bhati vs. S.B.B.J. reported in (2009) 2 SCT</div><div>353 which had relied upon the judgment of this Court in</div><div>Balbir Kaur (supra) to hold that the objection with regard</div><div>to the family income cannot be really considered as an</div><div>objection to deny compassionate appointment. As far as the</div><div>first question of law is concerned, the High Court has</div><div>simply stated that the effective date of consideration of</div><div>the application for compassionate appointment would be the</div><div>date on which the respondent’s father died. The High Court</div><div>has stated that the 1998 Scheme was in force as on the date</div><div>when the respondent’s father died and, therefore, the said</div><div>Scheme would be applicable. However, we find that while</div><div>answering the questions of law, the High Court has erred on</div><div>both counts.</div><div>18. In this regard, we would like to consider the issue</div><div>regarding the consideration of the financial position of</div><div>the respondent vis-a-vis the eligibility to be considered</div><div>11</div><div>for appointment on compassionate grounds. The relevant</div><div>clause of the Scheme reads as under:</div><div>“b) Dependent of an employee dying in harness</div><div>can be considered for compassionate appointment</div><div>provided the family is without means of livelihood</div><div>and the condition of the family is penurious.</div><div>c) Calculation formula for income:</div><div>Following formula would be followed for arriving at</div><div>the financial position or income of the</div><div>family:</div><div>The total of the following amounts received as</div><div>Terminal Benefits will form the available resources:</div><div>i. Balance of provident fund.</div><div>ii. Gratuity.</div><div>iii. Additional Retirement Benefits.</div><div>iv. Investments made from loan from others.</div><div>From the above, following outstanding financial</div><div>liabilities to be deducted:</div><div>i. Housing loan</div><div>ii. Vehicle loan</div><div>iii. Other loans from bank</div><div>iv. Loan from others</div><div>After arriving at the net amount remaining with the</div><div>family, interest @11% be applied to arrive at monthly</div><div>income of the family by further taking into</div><div>consideration:</div><div>i. Net salary of dependent family members</div><div>viz., spouse/ son/ daughter/ dependent</div><div>unmarried brother/dependent unmarried sister.</div><div>ii. Pension (monthly)</div><div>iii. Income from savings and other investments.</div><div>After arriving at the monthly income as above, if</div><div>the same is less than 60% of the total emoluments</div><div>(which the deceased was drawing at the time of death)</div><div>less Tax @ 15% (if the income is more than Rs.10,000/-</div><div>12</div><div>p.m.) the case for compassionate appointment can be</div><div>considered.”</div><div>19. While applying the said formula to the case at hand,</div><div>it is noted from the details submitted with regard to the</div><div>deceased employee and his dependents that the income of the</div><div>widow of the deceased was Rs.6,845/- per month (basic pay</div><div>of Rs.4140/- per month) as she was employed in the Health</div><div>Department of the State Government, and her family pension</div><div>was Rs.3,478/- per month. Thus, the gross total income of</div><div>the family per month comes to Rs.10,323/- and the net</div><div>income is Rs.7,618/- per month. The said figure has been</div><div>taken into consideration while applying the formula</div><div>referred to above and after applying the said formula to</div><div>the case of the respondent, we find that the monthly income</div><div>so arrived at is not less than 60% of the total emoluments</div><div>and thus, the case of the respondent cannot be considered</div><div>on compassionate basis on that score. The total emoluments</div><div>of the deceased father of the respondent were Rs.3,210/-</div><div>per month at the time of his death which is lesser than the</div><div>total net income of the deceased’s family. Thus, the total</div><div>income of the family is not less than 60% of the total</div><div>emoluments which the deceased was drawing at the time of</div><div>his death as per the Scheme under consideration. In that</div><div>view of the matter, the High Court ought to have taken into</div><div>consideration the factual details rather than just</div><div>referring to the judgments in answering the questions of</div><div>law.</div><div>13</div><div>20. As far as the first question of law is concerned, it</div><div>has been clarified during the course of arguments by the</div><div>learned counsel for the respondent that the respondent was</div><div>eligible to be considered for the post of Peon as he had</div><div>passed 8th standard during the life time of his father and</div><div>thus, was eligible to be considered to the said post as on</div><div>the date on which he made the said application. We do not</div><div>think that the said argument would be of assistance to the</div><div>respondent inasmuch as the respondent is not qualified or</div><div>is eligible to be considered for said post on compassionate</div><div>basis having regard to the family income of the respondent.</div><div>21. In the circumstances, we are of the view that the</div><div>High Court was not right in answering the questions of law</div><div>in favour of the respondent and thereby, setting aside the</div><div>judgment of the First Appellate Court and restoring the</div><div>judgment of the Trial Court.</div><div>22. In the result, the appeal is allowed and the</div><div>judgment of the High Court is set aside and the suit of the</div><div>respondent is dismissed.</div><div>23. The Parties to bear their respective costs.</div><div>24. Pending application(s), if any, shall stand disposed</div><div>14</div><div>of.</div><div> ……………………………………………………J.</div><div> (B.V. NAGARATHNA)</div><div> …………………………………………………J.</div><div> (MANOJ MISRA)</div><div>NEW DELHI;</div><div>JUNE 21, 2023.</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-41949382223895271842023-06-02T09:31:00.001-07:002023-06-02T09:31:25.922-07:0010 Landmark Judgement on Indian Constitution <main class="relative h-full w-full transition-width flex flex-col overflow-hidden items-stretch flex-1" style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; align-items: stretch; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; display: flex; flex-direction: column; flex: 1 1 0%; font-family: Söhne, ui-sans-serif, system-ui, -apple-system, "Segoe UI", Roboto, Ubuntu, Cantarell, "Noto Sans", sans-serif, "Helvetica Neue", Arial, "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol", "Noto Color Emoji"; height: 651.455px; overflow: hidden; position: relative; transition-duration: 0.15s; transition-property: width; transition-timing-function: cubic-bezier(0.4, 0, 0.2, 1); width: 393.091px;"><div class="flex-1 overflow-hidden" style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; flex: 1 1 0%; overflow: hidden;"><div class="react-scroll-to-bottom--css-ybtzn-79elbk h-full dark:bg-gray-800" style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; height: 651.455px; position: relative;"><div class="react-scroll-to-bottom--css-ybtzn-1n7m0yu" style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; height: 651.455px; overflow-y: auto; width: 393.091px;"><div class="flex flex-col text-sm dark:bg-gray-800" style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; display: flex; flex-direction: column; font-size: 0.875rem; line-height: 1.25rem;"><div class="group w-full text-gray-800 dark:text-gray-100 border-b border-black/10 dark:border-gray-900/50 bg-gray-50 dark:bg-[#444654]" style="--tw-bg-opacity: 1; --tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-text-opacity: 1; --tw-translate-x: 0; --tw-translate-y: 0; border-color: rgba(0, 0, 0, 0.1); border-image: initial; border-style: solid; border-width: 0px 0px 1px; box-sizing: border-box; color: rgba(52,53,65,var(--tw-text-opacity)); width: 385.091px;"><div class="flex p-4 gap-4 text-base md:gap-6 md:max-w-2xl lg:max-w-xl xl:max-w-3xl md:py-6 lg:px-0 m-auto" style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; display: flex; font-size: 1rem; gap: 1rem; line-height: 1.5rem; margin: auto; padding: 1rem;"><div class="relative flex w-[calc(100%-50px)] flex-col gap-1 md:gap-3 lg:w-[calc(100%-115px)]" style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; display: flex; flex-direction: column; gap: 0.25rem; position: relative; width: calc(100% - 50px);"><div class="flex flex-grow flex-col gap-3" style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; display: flex; flex-direction: column; flex-grow: 1; gap: 0.75rem;"><div class="min-h-[20px] flex flex-col items-start gap-4 whitespace-pre-wrap break-words" style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; align-items: flex-start; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; display: flex; flex-direction: column; gap: 1rem; min-height: 20px; overflow-wrap: break-word; white-space-collapse: preserve;"><div class="markdown prose w-full break-words dark:prose-invert light" style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-prose-body: #374151; --tw-prose-bold: #111827; --tw-prose-bullets: #d1d5db; --tw-prose-captions: #6b7280; --tw-prose-code: #111827; --tw-prose-counters: #6b7280; --tw-prose-headings: #111827; --tw-prose-hr: #e5e7eb; --tw-prose-invert-body: #d1d5db; --tw-prose-invert-bold: #fff; --tw-prose-invert-bullets: #4b5563; --tw-prose-invert-captions: #9ca3af; --tw-prose-invert-code: #fff; --tw-prose-invert-counters: #9ca3af; --tw-prose-invert-headings: #fff; --tw-prose-invert-hr: #374151; --tw-prose-invert-lead: #9ca3af; --tw-prose-invert-links: #fff; --tw-prose-invert-pre-bg: rgba(0,0,0,.5); --tw-prose-invert-pre-code: #d1d5db; --tw-prose-invert-quote-borders: #374151; --tw-prose-invert-quotes: #f3f4f6; --tw-prose-invert-td-borders: #374151; --tw-prose-invert-th-borders: #4b5563; --tw-prose-lead: #4b5563; --tw-prose-links: #111827; --tw-prose-pre-bg: #1f2937; --tw-prose-pre-code: #e5e7eb; --tw-prose-quote-borders: #e5e7eb; --tw-prose-quotes: #111827; --tw-prose-td-borders: #e5e7eb; --tw-prose-th-borders: #d1d5db; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; color: var(--tw-prose-body); font-size: 1rem; line-height: 1.75; max-width: none; overflow-wrap: break-word; width: 303.091px;"><p style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; margin: 1.25em 0px;">To provide some information, here are ten landmark judgments related to various provisions of the Indian Constitution:</p><ol style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; counter-reset: item 0; display: flex; flex-direction: column; list-style-image: initial; list-style-position: initial; margin: 1.25em 0px; padding: 0px 0px 0px 1rem;"><li style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; margin: 0px; padding-left: 0.375em;"><p style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; margin: 0px;">Keshavananda Bharati v. State of Kerala (1973) - This case established the doctrine of the basic structure, which limits the power of Parliament to amend certain fundamental features of the Constitution.</p></li><li style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; margin: 0px; padding-left: 0.375em;"><p style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; margin: 0px;">Indira Gandhi v. Raj Narain (1975) - The court declared the election of then-Prime Minister Indira Gandhi to be void, leading to significant changes in election law.</p></li><li style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; margin: 0px; padding-left: 0.375em;"><p style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; margin: 0px;">Maneka Gandhi v. Union of India (1978) - This judgment expanded the scope of the fundamental right to life and personal liberty under Article 21 and emphasized procedural fairness.</p></li><li style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; margin: 0px; padding-left: 0.375em;"><p style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; margin: 0px;">Minerva Mills Ltd. v. Union of India (1980) - The court struck down certain provisions of the 42nd Constitutional Amendment Act, asserting the principle of basic structure once again.</p></li><li style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; margin: 0px; padding-left: 0.375em;"><p style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; margin: 0px;">S.R. Bommai v. Union of India (1994) - The court established guidelines for the imposition of President's rule in a state and reaffirmed the federal nature of the Indian Constitution.</p></li><li style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; margin: 0px; padding-left: 0.375em;"><p style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; margin: 0px;">Vishakha v. State of Rajasthan (1997) - This case laid down guidelines for preventing and addressing sexual harassment in the workplace.</p></li><li style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; margin: 0px; padding-left: 0.375em;"><p style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; margin: 0px;">Kesavananda Bharati Sripadagalvaru v. State of Kerala (1973) - The court held that the power of Parliament to amend the Constitution under Article 368 is not unlimited and that certain basic features of the Constitution are beyond its amending power.</p></li><li style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; margin: 0px; padding-left: 0.375em;"><p style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; margin: 0px;">Naz Foundation v. Government of NCT of Delhi (2009) - The court decriminalized consensual homosexual acts between adults by declaring Section 377 of the Indian Penal Code unconstitutional.</p></li><li style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; margin: 0px; padding-left: 0.375em;"><p style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; margin: 0px;">Navtej Singh Johar v. Union of India (2018) - In this case, the court recognized the right to privacy as a fundamental right and struck down the prohibition on same-sex relationships.</p></li><li style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; margin: 0px; padding-left: 0.375em;"><p style="--tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-ring-color: rgba(69,89,164,.5); --tw-ring-offset-color: #fff; --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-offset-width: 0px; --tw-ring-shadow: 0 0 transparent; --tw-rotate: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-shadow-colored: 0 0 transparent; --tw-shadow: 0 0 transparent; --tw-skew-x: 0; --tw-skew-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; border: 0px solid rgb(217, 217, 227); box-sizing: border-box; margin: 0px;">Aadhaar Judgment (2018) - The court upheld the constitutional validity of the Aadhaar card scheme while placing restrictions on its mandatory use and clarifying issues related to privacy and data protection.</p></li></ol></div></div></div></div></div></div></div></div></div></div></main>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-19333257458341644512023-05-05T05:54:00.002-07:002023-05-05T05:54:36.415-07:00SC Jurisdiction<div style="text-align: justify;">Jurisdiction :</div><div style="text-align: justify;">129. Supreme Court to be a court of record The Supreme Court shall be a court of record and shall have all the powers of such a court including the power to punish for contempt of itself.</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Inherent Power - Subramanian Swamy vs Arun Shourie </div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Compliance – Subrata Roy Sahara vs Union of India</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Two objects of Contempt Jurisdiction – Mininderjit Singh Bitta vs Union of India</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Special Jurisdiction – SCBA vs Union of India</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Truth as a Defence – Subramanian Swamy vs Arun Shourie</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Unfettered Suo Moto power of Contempt – Subramanian Swamy vs Arun Shourie</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">131. Original jurisdiction of the Supreme Court Subject to the provisions of this Constitution, the Supreme Court shall, to the exclusion of any other court, have original jurisdiction in any dispute.</div><div style="text-align: justify;">(a) between the Government of India and one or more States; or</div><div style="text-align: justify;">(b) between the Government of India and any State or States on one side and one or more other States on the other; or</div><div style="text-align: justify;">(c) between two or more States, if and in so far as the dispute involves any question (whether of law or fact) on which the existence or extent of a legal right depends: Provided that the said jurisdiction shall not extend to a dispute arising out of any treaty, agreement, covenant, engagements, and or other similar instrument which, having been entered into or executed before the commencement of this Constitution, continues in operation after such commencement, or which provides that the said jurisdiction shall not extend to such a dispute</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Article 131 Jurisdiction is not for examining validity of laws – State of MP vs Union of India</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Constitutionality of Central Act examined under Article 131 – State of West Bengal vs UoI</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Rules of CPC not applicable to Article 131 – State of Karnataka vs Union of India</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Article 131 is a self contained code - State of Karnataka vs Union of India</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Reference to a larger bench (whether constitutionality of central act can be examined in the original suit under Article 131 – referred to larger bench in State of Jharkhand vs State of Bihar)</div><div style="text-align: justify;">132. Appellate jurisdiction of Supreme Court in appeals from High Courts in certain cases ( 1 ) An appeal shall lie to the Supreme Court from any judgment, decree or final order of a High Court in the territory of India, whether in a civil, criminal or other proceeding, if the High Court certifies under Article 134A that the case involves a substantial question of law as t the interpretation of this Constitution</div><div style="text-align: justify;">(2) Omitted</div><div style="text-align: justify;">(3) Where such a certificate is given, any party in the case may appeal to the Supreme Court on the ground that any such question as aforesaid has been wrongly decided Explanation For the purposes of this article, the expression final order includes an order declaring an issue which, if decided in favour of the appellant, would be sufficient for the final disposal of the case</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">133. Appellate jurisdiction of Supreme Court in appeals from High Courts in regard to civil matters</div><div style="text-align: justify;">(1) An appeal shall lie to the Supreme Court from any judgment, decree or final order in a civil proceeding of a High Court in the territory of India if the High Court certifies under Article 134A</div><div style="text-align: justify;">(a) that the case involves a substantial question of law of general importance; and</div><div style="text-align: justify;">(b) that in the opinion of the High Court the said question needs to be decided by the Supreme Court</div><div style="text-align: justify;">(2) Notwithstanding anything in Article 132, any party appealing to the Supreme Court under clause ( 1 ) may urge as one of the grounds in such appeal that a substantial question of law as to the interpretation of this Constitution has been wrongly decided</div><div style="text-align: justify;">(3) Notwithstanding anything in this article, no appeal shall, unless Parliament by law otherwise provides, lie to the Supreme Court from the judgment, decree or final order of one Judge of a High Court</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">134. Appellate jurisdiction of Supreme Court in regard to criminal matters</div><div style="text-align: justify;">(1) An appeal shall lie to the Supreme Court from any judgment, final order or sentence in a criminal proceeding of a High Court in the territory of India if the High Court has on appeal reversed an order of acquittal of an accused person and sentenced him to death; or has withdrawn for trial before itself any case from any court subordinate to its authority and has in such trial convicted the accused person and sentenced him to death; or</div><div style="text-align: justify;">(c) certifies under Article 134A that the case is a fit one for appeal to the Supreme Court: Provided that an appeal under sub clause (c) shall lie subject to such provisions as may be made in that behalf under clause ( 1 ) of Article 145 and to such conditions as the High Court may establish or require</div><div style="text-align: justify;">(2) Parliament may by law confer on the Supreme Court any further powers to entertain and hear appeals from any judgment, final order or sentence in a criminal proceeding of a High Court in the territory of India subject to such conditions and limitations as may be specified in such law</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">134A. Certificate for appeal to the Supreme Court Every High Court, passing or making a judgment, decree, final order, or sentence, referred to in clause ( 1 ) of Article 132 or clause ( 1 ) of Article 133, or clause ( 1 ) of Article 134</div><div style="text-align: justify;">(a) may, if it deems fit so to do, on its own motion; and</div><div style="text-align: justify;">(b) shall, if an oral application is made, by or on behalf of the party aggrieved, immediately after the passing or making of such judgment, decree, final order or sentence, determine, as soon as may be after such passing or making, the question whether a certificate of the nature referred to in clause ( 1 ) of Article 132, or clause ( 1 ) of Article 133 or, as the case may be, sub clause (c) of clause ( 1 ) of Article 134, may be given in respect of that case</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Substantial Question of Law – Madras Bar Association </div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>What are substantial Question of Law – Chunilal V Mehta & Sons Ltd vs Century Spg & Mfg Co. Ltd</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Substantial question of law – Public Importance – Madras Bar Association vs Union of India</div><div style="text-align: justify;">135. Jurisdiction and powers of the Federal Court under existing law to be exercisable by the Supreme Court Until Parliament by law otherwise provides, the Supreme Court shall also have jurisdiction and powers with respect to any matter to which the provisions of Article 133 or Article 134 do not apply if jurisdiction and powers in relation to that matter were exercisable by the Federal Court immediately before the commencement of this Constitution under any existing law</div><div style="text-align: justify;">136. Special leave to appeal by the Supreme Court</div><div style="text-align: justify;">(1) Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India</div><div style="text-align: justify;">(2) Nothing in clause ( 1 ) shall apply to any judgment, determination, sentence or order passed or made by any court or tribunal constituted by or under any law relating to the Armed Forces</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Under Article 136 SC does not act as third appellate court – Jaswant Singh vs State of Punjab</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Leave Once Granted could be revoked at later stage – Indo China Steam Navigation Co. Ltd vs Jasjit Singh, Addl. Collector of Custom</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Basic Principle of Article 136 – There is one superior court where a litigant can approach when he/she feels injustice is done – Anurag Kumar vs Mohan Lal</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Similarly Situated appeals and non filing of SLP against the order of High Court – Surendra Nath Pandey vs U.P. Cooperative Bank Ltd.</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Not a regular form of Appeal – N Suriyakala vs A Mohandoss</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Uniform Standard for granting Special Leave – Pritam Singh vs State</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Power of Article 136 to be invoked not in a routine fashion but in exceptional circumstances – Jamshed Hormusji Wadia vs Board of Trustees Port of Mumbai</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Doctrine of Merger and Article 136 – Kunhayammed vs State of Kerala</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Interference by Supreme Court under Article 136 in case against Grant of Bail by Courts below – State of Maharashtra vs Pappu @Suresh Budhramal Kalani</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Summarily dismissal of SLP – Delhi Administration vs Madan Lal Nangia</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Re Appreciation of Evidence – Bhagwan Singh vs State of MP / State of Rajasthan vs Shera Ram @ Vishnu Dutta</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Concurrent findings on Fact – Ganga Bishan vs Jay Narayan</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Scope and nature of Power under article 136 – referred to larger bench in Mathai @Joby vs George</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>In Limine Dismissal – Gangadhara Palo vs The Revenue Divisional Officer / Y Satyanarayan Reddy vs Mandal Revenue Officer A.P.S</div><div style="text-align: justify;">137. Review of judgments or orders by the Supreme Court Subject to the provisions of any law made by Parliament or any rules made under Article 145, the Supreme Court shall have power to review any judgment pronounced or order made by it.</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Review is not re-hearing – Kamlesh Verma vs Ms Mayawati</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Guidelines for maintaining Review Petition in Civil Matters – Kamlesh Verma vs Ms. Mayawati</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Power to Modify – Subrata Roy Sahara vs Union of India</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Oral Hearing in Review Petition not Mandatory – PN Eswara Iyer vs Registrar, Supreme Court</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Oral Hearing in Death Matters in Review Petition – a constitutional mandate – Mohd Arif vs Registrar, Supreme Court</div><div style="text-align: justify;">138. Enlargement of the jurisdiction of the Supreme Court</div><div style="text-align: justify;">(1) The Supreme Court shall have such further jurisdiction and powers with respect to any of the matters in the Union List as Parliament may by law confer</div><div style="text-align: justify;">(2) The Supreme Court shall have such further jurisdiction, and powers with respect to any matter as the Government of India and the Government of any State may by special agreement confer, if Parliament by law provides for the exercise of such jurisdiction and powers by the Supreme Court</div><div style="text-align: justify;">139. Conferment on the Supreme Court of powers to issue certain writs Parliament may by law confer on the Supreme Court power to issue directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them, for any purposes other than those mentioned in clause ( 2 ) of Article 32</div><div style="text-align: justify;">139A. Transfer of certain cases</div><div style="text-align: justify;">(1) Where cases involving the same or substantially the same questions of law are pending before the Supreme Court and one or more High Courts or before two or more High Courts and the Supreme Court is satisfied on its own motion or an application made by the Attorney General of India or by a party to any such case that such questions are substantial questions of general importance, the Supreme Court may withdraw the case or cases pending before the High Court or the High Courts and dispose of all the cases itself: Provided that the Supreme Court may after determining the said questions of law return any case so withdrawn together with a copy of its judgment on such questions to the High Court from which the case has been withdrawn, and the High Court shall on receipt thereof, proceed to dispose of the case in conformity with such judgment</div><div style="text-align: justify;">(2) The Supreme Court may, if it deems it expedient so to do for the ends of justice, transfer any case, appeal or other proceedings pending before any High Court to any other High Court</div><div style="text-align: justify;">140. Ancillary powers of Supreme Court Parliament may by law make provision for conferring upon the Supreme Court such supplemental powers not inconsistent with any of the provisions of this Constitution as may appear to be necessary or desirable for the purpose of enabling the Court more effectively to exercise the jurisdiction conferred upon it by or under this Constitution</div><div style="text-align: justify;">141. Law declared by Supreme Court to be binding on all courts The law declared by the Supreme Court shall be binding on all courts within the territory of India</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Principle of Precedent / Binding nature of decisions – Central Board of Dawoodi Bohra Community vs State of Maharashtra</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Record of Reason of Reference to Larger Bench – State of Jharkhand vs State of Bihar</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Ratio Decidendi – Manish Trivedi vs State of Rajasthan</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Principle of Precedence – Dashrath Rup Singh Rathod vs State of Maharashtra</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>What Constitute Precedent – State of Punjab vs Baldev Singh</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Obiter Dictum – Balwant Rai Saluja vs Air India Ltd</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Binding Nature of Decision - Balwant Rai Saluja vs Air India Ltd</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Precedent - Balwant Rai Saluja vs Air India Ltd</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Law Declared by This Court – CIT vs Sun Engineering Works p Ltd</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Strength of Bench and Not nature of decision makes a binding precedent – Union of India vs Narala Yadav</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span></div><div style="text-align: justify;">142. Enforcement of decrees and orders of Supreme Court and unless as to discovery, etc ( 1 ) The Supreme Court in the exercise of its jurisdiction may pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it, and any decree so passed or orders so made shall be enforceable throughout the territory of India in such manner as may be prescribed by or under any law made by Parliament and, until provision in that behalf is so made, in such manner as the President may by order prescribe</div><div style="text-align: justify;">(2) Subject to the provisions of any law made in this behalf by Parliament, the Supreme Court shall, as respects the whole of the territory of India, have all and every power to make any order for the purpose of securing the attendance of any person, the discovery or production of any documents, or the investigation or punishment of any contempt of itself.</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Purpose – Zahira Habibullah Sheikh vs State of Gujarat</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Justice according to law – Secretary, State of Karnataka vs Uma Devi</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Nature of Power – Delhi Judicial Service Association vs State of Gujarat / Manohar Lal Sharma vs Principal Secretary</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Curative Power – Supreme Court Bar Association vs Union of India</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Basic Concept – Arjun KHiamal Makhijani vs Jamnadas C Tuliani</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">143. Power of President to consult Supreme Court ( 1 ) If at any time it appears to the President that a question of law or fact has arisen, or is likely to arise, which is of such a nature and of such public importance that it is expedient to obtain the opinion of the Supreme Court upon it, he may refer the question to that Court for consideration and the Court may, after such hearing as it thinks fit, report to the President its opinion thereon</div><div style="text-align: justify;">(2) The President may, notwithstanding anything in the proviso to Article 131, refer a dispute of the kind mentioned in the said proviso to the Supreme Court for opinion and the Supreme Court shall, after such hearing as it thinks fit, report to the President its opinion thereon</div><div style="text-align: justify;">144. Civil and judicial authorities to act in aid of the Supreme Court All authorities, civil and judicial, in the territory of India shall act in aid of the Supreme Court</div><div style="text-align: justify;">145. Rules of Court, etc</div><div style="text-align: justify;">(1) Subject to the provisions of any law made by Parliament the Supreme Court may from time to time, with the approval of the President, make rules for regulating generally the practice and procedure of the Court including</div><div style="text-align: justify;">(a) rules as to the persons practising before the Court,</div><div style="text-align: justify;">(b) rules as to the procedure for hearing appeals, and other matters pertaining to appeals including the time within which appeals to the Court are to be entered;</div><div style="text-align: justify;">(c) rules as to the proceedings in the Court for the enforcement of any of the rights conferred by Part III;</div><div style="text-align: justify;">(cc) rules as to the proceedings in the Court under Article 139A;</div><div style="text-align: justify;">(d) rules as to the entertainment of appeals under sub clause (c) of clause ( 1 ) of Article 134;</div><div style="text-align: justify;">(e) any judgment pronounced or order made by the Court may be received and rules as to the conditions the procedure for such review including the time within which applications to the Court for such review are to be entered;</div><div style="text-align: justify;">(f) rules as to the costs of and incidental to any proceedings in the Court and as to the fees to be charged in respect of proceeding therein;</div><div style="text-align: justify;">(g) rules as to the granting of bail;</div><div style="text-align: justify;">(h) rules as to stay of proceedings;</div><div style="text-align: justify;">(i) rules providing for the summary determination of any appeal which appears to the Court to be frivolous or vexatious or brought for the purpose of delay;</div><div style="text-align: justify;">(j) rules as to the procedure for inquiries referred to in clause ( 1 ) of Article 317</div><div style="text-align: justify;">(2) Subject to the provisions of clause ( 3 ), rules made under this article may fix the minimum number of Judges who are to sit for any purpose, and may provide for the powers of single Judges and Division Courts</div><div style="text-align: justify;">(3) The minimum number of Judges who are to sit for the purpose of deciding any case involving a substantial question of law as to the interpretation of this Constitution or for the purpose of hearing any reference under Article 143 shall be five: Provided that, where the Court hearing an appeal under any of the provisions of this chapter other than Article 132 consists of less than five Judges and in the course of the hearing of the appeal the Court is satisfied that the appeal involves a substantial question of law as to the interpretation of this Constitution the determination of which is necessary for the disposal of the appeal, such Court shall refer the question for opinion to a Court constituted as required by this clause for the purpose of deciding any case involving such a question and shall on receipt of the opinion dispose of the appeal in conformity with such opinion</div><div style="text-align: justify;">(4) No judgment shall be delivered by the Supreme Court save in open Court, and no report shall be made under Article 143 save in accordance with an opinion also delivered in open Court</div><div style="text-align: justify;">(5) No judgment and no such opinion shall be delivered by the Supreme Court save with the concurrence of a majority of the Judges present at the hearing of the case, but nothing in this clause shall be deemed to prevent a Judge who does not concur from delivering a dissenting judgment or opinion</div><div style="text-align: justify;">146. Officers and servants and the expenses of the Supreme Court</div><div style="text-align: justify;">(1) Appointments of officers and servants of the Supreme Court shall be made by the Chief Justice of India or such other Judge or officer of the Court as he may direct: Provided that the President may by rule require that in such cases as may be specified in the rule, no person not already attached to the Court shall be appointed to any office connected with the Court, save after consultation with the Union Public Service Commission</div><div style="text-align: justify;">(2) Subject to the provisions of any law made by Parliament, the conditions of service of officers and servants of the Supreme Court shall be such as may be prescribed by rules made by the Chief Justice of India or by some other Judge or officer of the Court authorised by the Chief Justice of India to make rules for the purpose: Provided that the rules made under this clause shall, so far as they relate to salaries, allowances, leave or pensions, require the approval of the President</div><div style="text-align: justify;">(3) The administrative expenses of the Supreme Court, including all salaries, allowances and pensions payable to or in respect of the offices and servants of the Court, shall be charged upon the Consolidated Fund of India, and any fees or other moneys taken by the court shall form part of that Fund</div><div style="text-align: justify;">•<span style="white-space: pre;"> </span>Legislative Power – Supreme Court Employees Welfare Association vs Union of India</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-73865065985779346062023-05-02T00:52:00.004-07:002023-05-02T00:52:29.845-07:00Delhi Development Authority Versus Anita Singh & Ors.<div>Delhi Development Authority Versus Anita Singh & Ors. </div><div><br /></div>
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<p style="text-align: justify;"><b><a href="https://www.indianconstitution.in/p/landmark-judgments.html">Landmark Cases</a> of India / </b><span style="text-align: left;"><b><a href="https://www.indianconstitution.in/2021/09/100-100-landmark-cases-of-supreme-court.html">सुप्रीम कोर्ट के ऐतिहासिक फैसले</a></b></span></p>
<div><br /></div><div><br /></div><div><br /></div><div>Civil Appeal No.2994/2023</div><div>REPORTABLE</div><div>IN THE SUPREME COURT OF INDIA</div><div>CIVIL APPELLATE JURISDICTION</div><div>Civil Appeal No. 2994 of 2023</div><div>Delhi Development Authority … Appellant</div><div>Versus</div><div>Anita Singh & Ors. … Respondents</div><div>J U D G M E N T</div><div>Rajesh Bindal, J.</div><div>1. The order dated 22.08.2017 passed by the High</div><div>Court of Delhi in Writ Petition (C) No.5339/2016 has been</div><div>impugned before this Court. Vide aforesaid order, the Writ</div><div>Petition filed by the Respondent no.1 invoking Section 24(2) of</div><div>the Right to Fair Compensation and Transparency in Land</div><div>Acquisition, Rehabilitation and Resettlement Act, 2013</div><div>(hereinafter referred to as “the 2013 Act”) was allowed and it</div><div>was opined that acquisition in question has lapsed.</div><div>Page 1 of 19</div><div>Civil Appeal No.2994/2023</div><div>2. The facts of the case as are available on record are</div><div>that the Respondent no.1 had filed a writ petition stating that</div><div>she had purchased 100 square yards bearing Khasra</div><div>No.140/9/1 situated in the Revenue Estate of Village Dichaun</div><div>Kalan Delhi by virtue of sale deed dated 04.03.2005. The said</div><div>land was subject matter of acquisition. A Notification under</div><div>Section 4 of the Land Acquisition Act, 1894 (hereinafter referred</div><div>to as “the 1894 Act”) was issued on 07.04.2006 which was</div><div>followed by a Notification under Section 6 of the 1894 on</div><div>04.04.2007. The Award was announced by the Land Acquisition</div><div>Collector on 30.12.2008 under Section 11 of the 1894 Act.</div><div>3. The writ petition was filed in the year 2016 invoking</div><div>Section 24(2) of the 2013 Act claiming that neither the</div><div>compensation has been paid to the Respondent no.1 nor the</div><div>possession of the land had been taken by the acquiring</div><div>authority, hence, the acquisition lapsed.</div><div>4. The stand taken by the Land Acquisition Collector in</div><div>the counter affidavit filed before the High Court was that the</div><div>possession of the acquired land was taken on 10.02.2012</div><div>except 3 biswas of land on which certain structure had been</div><div>build up. The Respondent no.1 not being the recorded owner of</div><div>Page 2 of 19</div><div>Civil Appeal No.2994/2023</div><div>land, the compensation for the land, including the cases where</div><div>there was dispute regarding ownership, was deposited with the</div><div>Reference Court on 27.12.2013.</div><div>5. The High Court found that one of the conditions laid</div><div>down in Section 24(2) of the 2013 Act having not been</div><div>complied with regarding payment of compensation to the</div><div>Respondent no.1, the acquisition has lapsed.</div><div>6. The learned counsel for the appellant submitted that</div><div>in view of the Constitution Bench judgment of this Court in</div><div>Indore Development Authority v. Manoharlal and</div><div>Others</div><div>1</div><div>, whereby the earlier judgment of this Court in Pune</div><div>Municipal Corporation & Anr. v. Misirimal Solanki & Ors.</div><div>2</div><div>was overruled. The order passed by the High Court cannot be</div><div>legally sustained. It was opined by the Constitution Bench that</div><div>compliance of either of the two conditions i.e. taking over of</div><div>possession of the land or payment of compensation is sufficient</div><div>to sustain the acquisition. In the case in hand, it is the</div><div>admitted case of the Respondent no.1 that she was not the</div><div>recorded owner of the land though she claimed that the plot in</div><div>question was purchased by her vide sale deed dated</div><div>1 (2020) 8 SCC 129</div><div>2 (2014) 3 SCC 183</div><div>Page 3 of 19</div><div>Civil Appeal No.2994/2023</div><div>04.03.2005. The land is being utilized by the Government for</div><div>construction of 100 Meter wide Road, under Planned</div><div>Development of Delhi. The land is required for UER-II, which is</div><div>connecting NH-1, NH-10 and NH-8 further connecting it to</div><div>NH-2. The said project is of great public importance and has to</div><div>be completed before 15 August 2023 in light of Amrit Mahotsav</div><div>(75 years of Independence). This will help in de-congestion of</div><div>Delhi and provide better connectivity to the public. As there</div><div>was dispute regarding ownership, the amount of compensation</div><div>was deposited with the Reference Court on 27.12.2013. The</div><div>same will amount to tendering the compensation as in case of</div><div>dispute of ownerships it could not have been paid to anyone.</div><div>Learned counsel for the appellant further submitted that the</div><div>Respondent no.1 herself had filed application on 06.05.2009</div><div>before the Land Acquisition Collector for release of</div><div>compensation. She clearly stated therein that though she is</div><div>not the recorded owner of the land, as she had purchased the</div><div>same through general power of attorney, the compensation</div><div>should not be paid to the recorded owner of the plot. This was</div><div>admission on the part of the Respondent no.1 that she had</div><div>Page 4 of 19</div><div>Civil Appeal No.2994/2023</div><div>knowledge about acquisition of land. The order passed by the</div><div>High Court is liable to be set aside.</div><div>7. Heard learned counsel for the parties and perused</div><div>the paper books.</div><div>8. The Constitution Bench of this Court in Indore</div><div>Development Authority's case (supra) has opined that</div><div>satisfaction of either of the conditions namely either taking</div><div>possession of the acquired land or payment of compensation to</div><div>the landowners would be sufficient to save the acquisition from</div><div>being lapsed in terms of Section 24(2) of the 2013 Act. Various</div><div>questions posed before the Constitution Bench of this Court</div><div>were also answered. Relevant para-nos. 362 and 366 are</div><div>extracted below:</div><div>“362. Resultantly, the decision rendered in</div><div>Pune Municipal Corporation & Anr. (supra) is</div><div>hereby overruled and all other decisions in which</div><div>Pune Municipal Corporation (supra) has been</div><div>followed, are also overruled. …</div><div>...</div><div>366. In view of the aforesaid discussion, we</div><div>answer the questions as under:</div><div>366.1. Under the provisions of Section 24(1)</div><div>(a) in case the award is not made as on 1-1-</div><div>Page 5 of 19</div><div>Civil Appeal No.2994/2023</div><div>2014, the date of commencement of the 2013</div><div>Act, there is no lapse of proceedings.</div><div>Compensation has to be determined under the</div><div>provisions of the 2013 Act.</div><div>366.2. In case the award has been passed</div><div>within the window period of five years excluding</div><div>the period covered by an interim order of the</div><div>court, then proceedings shall continue as</div><div>provided under Section 24(1)(b) of the 2013 Act</div><div>under the 1894 Act as if it has not been repealed.</div><div>366.3. The word “or” used in Section 24(2)</div><div>between possession and compensation has to be</div><div>read as “nor” or as “and”. The deemed lapse of</div><div>land acquisition proceedings under Section 24(2)</div><div>of the 2013 Act takes place where due to inaction</div><div>of authorities for five years or more prior to</div><div>commencement of the said Act, the possession</div><div>of land has not been taken nor compensation has</div><div>been paid. In other words, in case possession has</div><div>been taken, compensation has not been paid</div><div>then there is no lapse. Similarly, if compensation</div><div>has been paid, possession has not been taken</div><div>then there is no lapse.</div><div>(emphasis supplied)</div><div>366.4. The expression “paid” in the main part</div><div>of Section 24(2) of the 2013 Act does not include</div><div>a deposit of compensation in court. The</div><div>consequence of non- deposit is provided in the</div><div>Page 6 of 19</div><div>Civil Appeal No.2994/2023</div><div>proviso to Section 24(2) in case it has not been</div><div>deposited with respect to majority of</div><div>landholdings then all beneficiaries (landowners)</div><div>as on the date of notification for land acquisition</div><div>under Section 4 of the 1894 Act shall be entitled</div><div>to compensation in accordance with the</div><div>provisions of the 2013 Act. In case the obligation</div><div>under Section 31 of the Land Acquisition Act,</div><div>1894 has not been fulfilled, interest under</div><div>Section 34 of the said Act can be granted. Nondeposit of compensation (in court) does not</div><div>result in the lapse of land acquisition</div><div>proceedings. In case of non-deposit with respect</div><div>to the majority of holdings for five years or more,</div><div>compensation under the 2013 Act has to be paid</div><div>to the “landowners” as on the date of notification</div><div>for land acquisition under Section 4 of the 1894</div><div>Act.</div><div>366.5. In case a person has been tendered</div><div>the compensation as provided under Section</div><div>31(1) of the 1894 Act, it is not open to him to</div><div>claim that acquisition has lapsed under Section</div><div>24(2) due to non-payment or non- deposit of</div><div>compensation in court. The obligation to pay is</div><div>complete by tendering the amount under Section</div><div>31(1). The landowners who had refused to accept</div><div>compensation or who sought reference for higher</div><div>compensation, cannot claim that the acquisition</div><div>Page 7 of 19</div><div>Civil Appeal No.2994/2023</div><div>proceedings had lapsed under Section 24(2) of</div><div>the 2013 Act.</div><div>366.6. The proviso to Section 24(2) of the</div><div>2013 Act is to be treated as part of Section 24(2),</div><div>not part of Section 24(1)(b).</div><div>366.7. The mode of taking possession under</div><div>the 1894 Act and as contemplated under Section</div><div>24(2) is by drawing of inquest</div><div>report/memorandum. Once award has been</div><div>passed on taking possession under Section 16 of</div><div>the 1894 Act, the land vests in State there is no</div><div>divesting provided under Section 24(2) of the</div><div>2013 Act, as once possession has been taken</div><div>there is no lapse under Section 24(2).</div><div>366.8. The provisions of Section 24(2)</div><div>providing for a deemed lapse of proceedings are</div><div>applicable in case authorities have failed due to</div><div>their inaction to take possession and pay</div><div>compensation for five years or more before the</div><div>2013 Act came into force, in a proceeding for</div><div>land acquisition pending with the authority</div><div>concerned as on 1-1-2014. The period of</div><div>subsistence of interim orders passed by court</div><div>has to be excluded in the computation of five</div><div>years.</div><div>Page 8 of 19</div><div>Civil Appeal No.2994/2023</div><div>366.9. Section 24(2) of the 2013 Act does not</div><div>give rise to new cause of action to question the</div><div>legality of concluded proceedings of land</div><div>acquisition. Section 24 applies to a proceeding</div><div>pending on the date of enforcement of the 2013</div><div>Act i.e. 1-1-2014. It does not revive stale and</div><div>time-barred claims and does not reopen</div><div>concluded proceedings nor allow landowners to</div><div>question the legality of mode of taking</div><div>possession to reopen proceedings or mode of</div><div>deposit of compensation in the treasury instead</div><div>of court to invalidate acquisition.”</div><div><br /></div><div>9. It is the admitted case of Respondent no.1 that she</div><div>was not the recorded owner of the land at the time of issuance</div><div>of Notification under Section 4 of 1894 Act or even at the time</div><div>of the passing of the Award. This is even mentioned in the</div><div>application dated 06.05.2009 filed by her to the Land</div><div>Acquisition Collector for release of compensation. This</div><div>establishes knowledge of acquisition and passing of award. On</div><div>account of fact that there was dispute of ownership, the</div><div>amount of compensation was deposited by the Land Acquisition</div><div>Collector with the Reference Court under Section 30/31 of the</div><div>1894 Act. On the issue of deposit of compensation with the</div><div>Reference Court, the position of law has been settled in Indore</div><div>Page 9 of 19</div><div>Civil Appeal No.2994/2023</div><div>Development Authority’s case (supra). Paras 117, 118 and</div><div>119 thereof, which are extracted below:</div><div>“117. Payment of compensation under</div><div>the 1894 Act is provided for by Section 31 of the</div><div>Act, which is to be after passing of the award</div><div>under Section 11. The exception, is in case of</div><div>urgency under Section 17, is where it has to be</div><div>tendered before taking possession. Once an</div><div>award has been passed, the Collector is bound to</div><div>tender the payment of compensation to the</div><div>persons interested entitled to it, as found in the</div><div>award and shall pay it to them unless</div><div>“prevented” by the contingencies mentioned in</div><div>sub-section (2) of Section 31. Section 31(3)</div><div>contains a non obstante clause which authorises</div><div>the Collector with the sanction of the appropriate</div><div>Government, in the interest of the majority, by</div><div>the grant of other lands in exchange, the</div><div>remission of land revenue on other lands or in</div><div>such other way as may be equitable.</div><div>118. Section 31(1) enacts that the Collector</div><div>has to tender payment of the compensation</div><div>awarded by him to the persons interested</div><div>entitled thereto according to the award and shall</div><div>pay such amount to a person interested in the</div><div>land, unless he (the Collector) is prevented from</div><div>Page 10 of 19</div><div>Civil Appeal No.2994/2023</div><div>doing so, for any of the three contingencies</div><div>provided by sub-section (2). Section 31(2)</div><div>provides for deposit of compensation in court in</div><div>case the State is prevented from making</div><div>payment in the event of:</div><div>(i) refusal to receive it;</div><div>(ii) if there be no person competent to</div><div>alienate the land;</div><div>(iii) if there is any dispute as to the title to</div><div>receive the compensation; or</div><div>(iv) if there is dispute as to the</div><div>apportionment.</div><div>In such exigencies, the Collector shall deposit the</div><div>amount of the compensation in the court to which</div><div>a reference under Section 18 would be submitted.</div><div>119. Section 34 deals with a situation where</div><div>any of the obligations under Section 31 is not</div><div>fulfilled i.e. when the amount of compensation is</div><div>not paid or deposited on or before taking</div><div>possession of the land, the Collector shall pay the</div><div>amount awarded with interest thereon @ 9% p.a.</div><div>from the time of so taking possession until it shall</div><div>have been so paid or deposited; and after one</div><div>year from the date on which possession is taken,</div><div>interest payable shall be @ 15% p.a. The scheme</div><div>of the 1894 Act clearly makes it out that when</div><div>the award is passed under Section 11, thereafter</div><div>possession is taken as provided under Section 16,</div><div>land vests in the State Government. Under</div><div>Page 11 of 19</div><div>Civil Appeal No.2994/2023</div><div>Section 12(2), a notice of the award has to be</div><div>issued by the Collector. Taking possession is not</div><div>dependent upon payment. Payment has to be</div><div>tendered under Section 31 unless the Collector is</div><div>“prevented from making payment”, as provided</div><div>under Section 31(2). In case of failure under</div><div>Section 31(1) or 31(3), also Collector is not</div><div>precluded from making payment, but it carries</div><div>interest under Section 34 @ 9% for the first year</div><div>from the date it ought to have been paid or</div><div>deposited and thereafter @ 15%. Thus, once land</div><div>has been vested in the State under Section 16, in</div><div>case of failure to pay the compensation under</div><div>Section 31(1) or to deposit under Section 31(2),</div><div>compensation has to be paid along with interest,</div><div>and due to non-compliance of Section 31, there is</div><div>no lapse of acquisition. The same spirit has been</div><div>carried forward in the 2013 Act by providing in</div><div>Section 24(2). Once possession has been taken</div><div>though the payment has not been made, the</div><div>compensation has to be paid along with interest</div><div>as envisaged under Section 34, and in a case,</div><div>payment has been made, possession has not</div><div>been taken, there is no lapse under Section</div><div>24(2). In a case where possession has been taken</div><div>under the 1894 Act as provided by Section 16 or</div><div>17(1) the land vests absolutely in the State, free</div><div>from all encumbrances, if compensation is not</div><div>Page 12 of 19</div><div>Civil Appeal No.2994/2023</div><div>paid, there is no divesting there will be no lapse</div><div>as compensation carries interest @ 9% or @ 15%</div><div>as envisaged under Section 34 of the 1894 Act.</div><div>The proviso to Section 24(2) makes some</div><div>wholesome provision in case the amount has not</div><div>been deposited with respect to majority of</div><div>landholdings, in such an event, not only those</div><div>persons but all the beneficiaries, though for</div><div>minority of holding compensation has been paid,</div><div>shall be entitled to higher compensation in</div><div>accordance with the provisions of the 2013 Act.</div><div>The expression used is “all beneficiaries specified</div><div>in the notification for acquisition under Section 4</div><div>of the said Land Acquisition Act” i.e. the 1894</div><div>Act, means that the persons who are to be paid</div><div>higher compensation are those who have been</div><div>recorded as beneficiaries as on the date of</div><div>notification under Section 4. The proviso gives</div><div>effect to, and furthers the principle that under the</div><div>1894 Act, the purchases made after issuance of</div><div>notification under Section 4 are void. As such, the</div><div>benefit of higher compensation under the proviso</div><div>to Section 24(2) is intended to be given to the</div><div>beneficiaries mentioned in the notification under</div><div>Section 4 of the 1894 Act.”</div><div>(emphasis supplied)</div><div>Page 13 of 19</div><div>Civil Appeal No.2994/2023</div><div>10. Further, with reference to Section 24(2) of the</div><div>2013 Act, the position is summed up in para 208 of Indore</div><div>Development Authority’s case (supra), which is</div><div>extracted below:</div><div>“208. … … … In our opinion, when</div><div>amount has been tendered, the obligation has</div><div>been fulfilled by the Collector. Landowners cannot</div><div>be forced to receive it. In case a person has not</div><div>accepted the amount wants to take the</div><div>advantage of non-payment, though the amount</div><div> has remained (sic unpaid) due to his own act. It is</div><div>not open to him to contend that the amount has</div><div>not been paid to him, as such, there should be</div><div>lapse of the proceedings. Even in a case when</div><div>offer for payment has been made but not</div><div>deposited, liability to pay amount along with</div><div>interest subsist and if not deposited for majority</div><div>of holding, for that adequate provisions have</div><div>been given in the proviso also to Section 24(2).</div><div>The scheme of the 2013 Act in Sections 77 and</div><div>80 is also the same as that provided in Sections</div><div>31 and 34 of the 1894 Act.”</div><div>(emphasis supplied)</div><div>11. The issue as to what is meant by "possession of the</div><div>land by the State after its acquisition" has also been considered</div><div>Page 14 of 19</div><div>Civil Appeal No.2994/2023</div><div>in Indore Development Authority’s case (supra). It is opined</div><div>therein that after the acquisition of land and passing of award,</div><div>the land vests in the State free from all encumbrances. The</div><div>vesting of land with the State is with possession. Any person</div><div>retaining the possession thereafter has to be treated</div><div>trespasser. When large chunk of land is acquired, the State is</div><div>not supposed to put some person or police force to retain the</div><div>possession and start cultivating on the land till it is utilized. The</div><div>Government is also not supposed to start residing or physically</div><div>occupying the same once process of the acquisition is</div><div>complete. If after the process of acquisition is complete and</div><div>land vest in the State free from all encumbrances with</div><div>possession, any person retaining the land or any re-entry made</div><div>by any person is nothing else but trespass on the State land.</div><div>Relevant paragraphs 244, 245 and 256 are extracted below:</div><div>"244. Section 16 of the Act of 1894</div><div>provided that possession of land may be taken</div><div>by the State Government after passing of an</div><div>award and thereupon land vest free from all</div><div>encumbrances in the State Government. Similar</div><div>are the provisions made in the case of urgency</div><div>in Section 17(1). The word "possession" has</div><div>been used in the Act of 1894, whereas in Section</div><div>Page 15 of 19</div><div>Civil Appeal No.2994/2023</div><div>24(2) of Act of 2013, the expression "physical</div><div>possession" is used. It is submitted that drawing</div><div>of panchnama for taking over the possession is</div><div>not enough when the actual physical possession</div><div>remained with the landowner and Section 24(2)</div><div>requires actual physical possession to be taken,</div><div>not the possession in any other form. When the</div><div>State has acquired the land and award has been</div><div>passed, land vests in the State Government free</div><div>from all encumbrances. The act of vesting of the</div><div>land in the State is with possession, any person</div><div>retaining the possession, thereafter, has to be</div><div>treated as trespasser and has no right to</div><div>possess the land which vests in the State free</div><div>from all encumbrances.</div><div>245. The question which arises whether</div><div>there is any difference between taking</div><div>possession under the Act of 1894 and the</div><div>expression "physical possession" used in Section</div><div>24(2). As a matter of fact, what was</div><div>contemplated under the Act of 1894, by taking</div><div>the possession meant only physical possession</div><div>of the land. Taking over the possession under</div><div>the Act of 2013 always amounted to taking over</div><div>physical possession of the land. When the State</div><div>Government acquires land and drawns up a</div><div>memorandum of taking possession, that</div><div>Page 16 of 19</div><div>Civil Appeal No.2994/2023</div><div>amounts to taking the physical possession of the</div><div>land. On the large chunk of property or</div><div>otherwise which is acquired, the Government is</div><div>not supposed to put some other person or the</div><div>police force in possession to retain it and start</div><div>cultivating it till the land is used by it for the</div><div>purpose for which it has been acquired. The</div><div>Government is not supposed to start residing or</div><div>to physically occupy it once possession has been</div><div>taken by drawing the inquest proceedings for</div><div>obtaining possession thereof. Thereafter, if any</div><div>further retaining of land or any re-entry is made</div><div>on the land or someone starts cultivation on the</div><div>open land or starts residing in the outhouse,</div><div>etc., is deemed to be the trespasser on land</div><div>which in possession of the State. The possession</div><div>of trespasser always inures for the benefit of the</div><div>real owner that is the State Government in the</div><div>case.</div><div> xxxx</div><div>256. Thus, it is apparent that vesting</div><div>is with possession and the statute has provided</div><div>under Sections 16 and 17 of the Act of 1894 that</div><div>once possession is taken, absolute vesting</div><div>occurred. It is an indefeasible right and vesting</div><div>is with possession thereafter. The vesting</div><div>specified under Section 16, takes place after</div><div>various steps, such as, notification under Section</div><div>Page 17 of 19</div><div>Civil Appeal No.2994/2023</div><div>4, declaration under Section 6, notice under</div><div>Section 9, award under Section 11 and then</div><div>possession. The statutory provision of vesting of</div><div>property absolutely free from all encumbrances</div><div>has to be accorded full effect. Not only the</div><div>possession vests in the State but all other</div><div>encumbrances are also removed forthwith. The</div><div>title of the landholder ceases and the state</div><div>becomes the absolute owner and in possession</div><div>of the property. Thereafter there is no control of</div><div>the landowner over the property. He cannot</div><div>have any animus to take the property and to</div><div>control it. Even if he has retained the possession</div><div>or otherwise trespassed upon it after possession</div><div>has been taken by the State, he is a trespasser</div><div>and such possession of trespasser enures for his</div><div>benefit and on behalf of the owner."</div><div>(emphasis supplied)</div><div>12. As per the stand taken by the appellant, the land in</div><div>question is being utilised for UER-II, which is connecting NH-1,</div><div>NH-10 and NH-8 further connecting it to NH-2. The said project</div><div>is of great public importance and has to be completed before</div><div>15.08.2023 in light of Amrit Mahotsav (75 years of</div><div>Independence). This will help in de-congestion of Delhi.</div><div>Page 18 of 19</div><div>Civil Appeal No.2994/2023</div><div>13. From the facts as are available on record, it is evident</div><div>that Respondent no.1 was admittedly not the recorded owner of</div><div>the land at time of acquisition thereof or pronouncement of</div><div>Award by the Land Acquisition Collector. The amount of</div><div>compensation was deposited with the Reference Court in term</div><div>of Section 30/31 of the 1894 Act as the same could not be paid</div><div>to Respondent no.1. Hence, one of the conditions being</div><div>satisfied, in our view the order passed by the High Court cannot</div><div>be legally sustained whereby the acquisition has been held to</div><div>have lapsed in terms of Section 24(2) of the 2013 Act.</div><div>14. The appeal is accordingly allowed and the impugned</div><div>order passed by the High Court is set aside. The Writ Petition</div><div>filed by the Respondent no.1 in the High Court is dismissed.</div><div> ______________, J.</div><div>(Abhay S. Oka)</div><div> ______________, J.</div><div>(Rajesh Bindal)</div><div>New Delhi</div><div>May 01, 2023.</div><div>//vk-ss//</div><div>Page 19 of 19</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-58759826261859249862023-04-17T12:01:00.001-07:002023-04-17T12:01:03.744-07:00Central Bureau of Investigation VERSUS Santosh Karnani & Anr.<div>Central Bureau of Investigation VERSUS Santosh Karnani & Anr. </div><div><br /></div>
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<p style="text-align: justify;"><b><a href="https://www.indianconstitution.in/p/landmark-judgments.html">Landmark Cases</a> of India / </b><span style="text-align: left;"><b><a href="https://www.indianconstitution.in/2021/09/100-100-landmark-cases-of-supreme-court.html">सुप्रीम कोर्ट के ऐतिहासिक फैसले</a></b></span></p>
<div><br /></div><div><br /></div><div>REPORTABLE</div><div>IN THE SUPREME COURT OF INDIA</div><div>CRIMINAL APPELLATE JURISDICTION</div><div>CRIMINAL APPEAL NO. 1148 OF 2023</div><div>[Arising out of Special Leave Petition (Criminal)</div><div>No. 295 of 2023]</div><div>Central Bureau of Investigation … Appellant</div><div>VERSUS</div><div> Santosh Karnani & Anr. … Respondents</div><div>WITH</div><div>CRIMINAL APPEAL NO. 1149 OF 2023</div><div>[Arising out of Special Leave Petition (Criminal)</div><div>No. 724 of 2023]</div><div>Rupesh Balwantbhai Brambhatt … Appellant</div><div>VERSUS</div><div>Santosh Karnani & Ors. …Respondents</div><div>JUDGMENT</div><div>Surya Kant, J.</div><div>1. Leave granted.</div><div>2. The Appellants in the two Criminal Appeals,</div><div>the Central Bureau of Investigation & Rupesh</div><div>Balwantbhai Brambhatt (hereinafter, “complainant”)</div><div>respectively, are aggrieved by the order dated 19th</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 1 of 37</div><div>December, 2022 passed by the High Court of</div><div>Gujarat at Ahmedabad allowing the anticipatory bail</div><div>application filed by Respondent No. 1 in connection</div><div>with FIR registered as C.R. No. RC0292022A0011 of</div><div>2022 before CBI/ACB/Gandhinagar Police Station,</div><div>District Gandhinagar for the offence under Section 7</div><div>of the Prevention of Corruption Act, 1988 as</div><div>amended in 2018.</div><div>BACKGROUND</div><div>3. The complainant is a businessman engaged in</div><div>the construction business that goes by the name:</div><div>Safal Construction Pvt. Ltd. In February 2019,</div><div>Respondent No. 1, an IRS Officer, posted as</div><div>Additional Commissioner of Income Tax,</div><div>Ahmedabad, conducted a survey for the financial</div><div>year 201819 under Section 133A of the Income Tax</div><div>Act, 1961 against Safal Construction Pvt. Ltd.</div><div>whereunder the group disclosed an additional</div><div>income of Rs. 50 crores. </div><div>4. Thereafter, in September 2021, search and</div><div>seizure action was initiated by the Investigation</div><div>Wing of Income Tax Department, Ahmedabad</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 2 of 37</div><div>against Safal Construction Pvt. Ltd. Following these</div><div>searches, some papers related to the complainant’s</div><div>business were seized and the Central Circle,</div><div>Range1 Division initiated the procedure for raising</div><div>a demand notice. It is the complainant’s case that</div><div>he found out that Respondent No. 1 was handling</div><div>his case and would be preparing the appraisal</div><div>memo. Subsequently, the complainant and</div><div>Respondent No. 1 met frequently in connection with</div><div>the case and it is alleged that during these</div><div>interactions, Respondent No. 1 threatened to ruin</div><div>the complainant’s business and demanded illegal</div><div>gratification.</div><div>5. On 29th September, 2022, Respondent No. 1</div><div>allegedly contacted the complainant and told him to</div><div>meet him on 3rd October, 2022. Accordingly, the</div><div>complainant met Respondent No. 1 at the Income</div><div>Tax Office where Respondent No. 1 demanded illegal</div><div>gratification of Rs. 30 lakhs to help the complainant</div><div>with his case. This conversation was recorded by the</div><div>complainant on a Digital Voice Recorder which has</div><div>been handed over to the investigating authorities</div><div>and a transcript of the same has also been provided</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 3 of 37</div><div>to this Court. The complainant was directed to</div><div>deposit the amount in the account of one Vardhman</div><div>in the Dhara Angadia Firm. </div><div>6. The complainant lodged a complaint the next</div><div>morning with ACB Police Station, Ahmedabad city at</div><div>07:15 hours and a trap was then laid. The</div><div>complainant’s employee was sent to the Angadia</div><div>firm with the bribe money amounting to Rs. 30</div><div>lakhs along with personnel from the ACB trap team.</div><div>Upon depositing Rs. 30 lakhs with Dhara Angadia</div><div>firm, the complainant contacted Respondent No. 1</div><div>through WhatsApp call which was recorded by the</div><div>ACB team wherein Respondent No. 1 acknowledged</div><div>payment of the amount. Immediately thereafter, one</div><div>ACB team went to detain and arrest Respondent</div><div>No. 1, who along with some staff members, is</div><div>alleged to have physically assaulted the ACB team</div><div>and escaped from the office due to the ensuing</div><div>chaos. It is also claimed that Respondent No. 1,</div><div>while escaping from the office, handed over his</div><div>mobile phone to a colleague. Simultaneously,</div><div>another ACB team recovered the bribe amount</div><div>deposited with Dhara Angadia. </div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 4 of 37</div><div>7. FIR No. 12/2022 was thus, registered against</div><div>Respondent No. 1 under Sections 7, 13(1) and 13(2)</div><div>of the Prevention of Corruption Act, 1988 on</div><div>4</div><div>th October, 2022.</div><div>8. Owing to the gravity of the case, on</div><div>12th October, 2022, the case was transferred to the</div><div>Central Bureau of Investigation (hereinafter, “CBI”)</div><div>and FIR No. 12/2022 was reregistered as C.R. No.</div><div>RC0292022A0011 of 2022 under Section 7 of the</div><div>Prevention of Corruption Act, 1988. The FIR records</div><div>that Respondent No. 1 evaded arrest by the ACB</div><div>team and was still at large at the time of</div><div>reregistration of the FIR. </div><div>9. Thereafter, a notice under Section 41A, Code of</div><div>Criminal Procedure (hereinafter, “CrPC”) was issued</div><div>to Respondent No. 1 calling upon him to appear</div><div>before the CBI but Respondent No. 1 failed to</div><div>respond. On 17th October, 2022, Respondent No. 1</div><div>wrote a letter to the Investigating Officer that he had</div><div>suffered severe anxiety & depression due to the</div><div>allegations levelled against him and had, thus, gone</div><div>to his home state of Rajasthan for medical</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 5 of 37</div><div>treatment. He sought four days’ time to join the</div><div>investigation.</div><div>10. During investigation Smit Thakkar, owner of</div><div>Dhara Angadia firm, informed the authorities that</div><div>the illegal gratification was deposited in the account</div><div>of one Malav Ajitbhai Mehta. It is also claimed that</div><div>prior to the deposit of the amount, Malav Mehta</div><div>informed Smit Thakkar that Rs. 30 lakhs would be</div><div>deposited in the account and would have to be</div><div>transferred to another person on the same day. </div><div>11. Another notice under Section 41A was issued</div><div>to Respondent No. 1 and again, he failed to appear</div><div>before the CBI. On 26th October, 2022, Respondent</div><div>No. 1 again sought one week’s time to appear before</div><div>the Investigating Officer vide a communication sent</div><div>from the email ID of Blue Heaven Hotel, Jaipur.</div><div>Subsequently, some more Section 41A notices were</div><div>issued to Respondent No. 1, to which he sought</div><div>more time to join the investigation on various</div><div>grounds. He simultaneously preferred an</div><div>application for grant of anticipatory bail. </div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 6 of 37</div><div>12. By an order dated 3rd November, 2022, the City</div><div>Civil & Sessions Court at Ahmedabad rejected</div><div>Respondent No. 1’s application for anticipatory bail.</div><div>The Special Judge CBI Court No. 3 observed that</div><div>Respondent No. 1 instead of cooperating with the</div><div>investigating agency, had absconded and got himself</div><div>admitted in a hospital in Rajasthan to evade the</div><div>process of law. Some of the observations made by</div><div>the Special Judge, CBI Court, are to the following</div><div>effect: </div><div>“Thus, the ground of ill health pleaded by</div><div>the Learned Advocate for the applicant</div><div>would hold no ground as this Court is of a</div><div>candid opinion that the applicant instead</div><div>of cooperating with the Investigating</div><div>Agency had absconded and had got himself</div><div>admitted in hospital at his native in</div><div>Rajasthan with a view to evade the process</div><div>of law.</div><div>… … …</div><div>In view of the aforesaid facts and</div><div>circumstances, this Court is of a candid</div><div>opinion that custodial interrogation of the</div><div>present applicant is a must to reach to</div><div>unearth the larger conspiracy. It is</div><div>necessary to unveil the modus operandi</div><div>adopted by the applicant in committing the</div><div>larger conspiracy and without</div><div>interrogation, it would be impossible to</div><div>collect the relevant evidence resulting into</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 7 of 37</div><div>incomplete investigation. It is also crystal</div><div>clear that the applicant with a view to avoid</div><div>arrest has filed the present application and</div><div>therefore, instead of cooperating in the</div><div>investigation have tried to thwart the ∙same</div><div>and thus, it can be said that the applicant</div><div>is not cooperating in the investigation.</div><div>… … …</div><div>This Court also cannot lose sight of the fact</div><div>that investigation in the matter is still</div><div>under progress and releasing the applicant</div><div>at this premature stage would pave way for</div><div>the applicant to influence the investigation,</div><div>hamper the witnesses and tamper the</div><div>evidence.”</div><div>13. The Court eventually held that custodial</div><div>interrogation of Respondent No. 1 was necessary to</div><div>reach the root of the matter. </div><div>14. Aggrieved by the order of the Special Judge,</div><div>CBI Court, Respondent No. 1 applied for</div><div>anticipatory bail before the High Court of Gujarat.</div><div>Meanwhile, on 22nd November, 2022, the Court of</div><div>Special CBI Judge issued a nonbailable warrant</div><div>against Respondent No. 1.</div><div>15. The High Court, vide impugned order dated</div><div>19th December, 2022, granted anticipatory bail to</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 8 of 37</div><div>Respondent No. 1. The High Court observed that</div><div>there is a doubt regarding the acceptance of illegal</div><div>gratification, as it was deposited in the account of</div><div>Vardhman in Dhara Angadia firm and there is no</div><div>evidence with respect to acceptance of the amount</div><div>by Respondent No. 1. The reasons on the basis of</div><div>which the High Court proceeded to grant</div><div>anticipatory bail are recorded in paragraph 12 of its</div><div>order, which states as follows: </div><div>“12. This Court has considered following</div><div>aspects;</div><div> (i) The FIR is registered on</div><div>12.10.2022 for the offence which is</div><div>alleged to have taken place on</div><div>04.10.2022. </div><div>(ii) Learned APP under instructions</div><div>of IO is unable to bring on record</div><div>any special circumstances against</div><div>the applicant. </div><div>(iii) The role attributed to the</div><div>applicant accused; </div><div>(iv) That the applicant is a Additional</div><div>Income Tax Commissioner and no</div><div>any other criminal antecedents</div><div>against him; </div><div>(v) There is creating serious doubt</div><div>about demand and acceptance of the</div><div>amount; </div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 9 of 37</div><div>(vi) There is no discovery or recovery</div><div>from the applicant;”</div><div>16. The High Court further directed that despite</div><div>grant of anticipatory bail, CBI could apply for police</div><div>remand of Respondent No. 1 and that if the same</div><div>was granted by the competent Magistrate,</div><div>Respondent No. 1 would be set free immediately</div><div>upon completion of the police remand. The relevant</div><div>part of the impugned order to this effect reads as</div><div>under:</div><div>“16. Despite this order, it would be open for</div><div>the Investigating Agency to apply to the</div><div>competent Magistrate, for police remand of</div><div>the applicant. The applicant shall remain</div><div>present before the learned Magistrate on</div><div>the first date of hearing of such application</div><div>and on all subsequent occasions, as may</div><div>be directed by the learned Magistrate. This</div><div>would be sufficient to treat the accused in</div><div>the judicial custody for the purpose of</div><div>entertaining application of the prosecution</div><div>for police remand. This is, however, without</div><div>prejudice to the right of the accused to seek</div><div>stay against an order of remand, if,</div><div>ultimately, granted and the power of the</div><div>learned Magistrate to consider such a</div><div>request in accordance with law. It is</div><div>clarified that the applicant even if,</div><div>remanded to the police custody, upon</div><div>completion of such period of police remand,</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 10 of 37</div><div>shall be set free immediately, subject to</div><div>other conditions of this anticipatory bail</div><div>order. At the trial, the Trial Court shall not</div><div>be influenced by the prima facie</div><div>observations made by this Court while</div><div>enlarging the applicant on bail. Rule is</div><div>made absolute. Direct service is permitted.”</div><div>17. Following the High Court’s directions,</div><div>Respondent No. 1 joined the investigation and</div><div>appeared on three days but is stated to have not</div><div>produced his mobile phone(s) though he was asked</div><div>to do so repeatedly. The CBI, then, applied for police</div><div>remand of Respondent No. 1 and, on 30th December,</div><div>2022, the Special Judge, CBI Court No. 3 partly</div><div>allowed the said application. The Court, upon</div><div>perusal of the case diary, observed that the</div><div>allegations against Respondent No. 1 seem wellfounded and that remand is necessary for the</div><div>purpose of investigation to collect the missing link of</div><div>evidence and to unearth the larger conspiracy. The</div><div>application was allowed in the following terms:</div><div>“The Accused Mr. Santosh Kumar Karnani</div><div>is directed to appear and surrender himself</div><div>to the custody of Investigating Officer,</div><div>CBI /ACB/ Gandhinagar from 10.00 am to</div><div>7.00 pm on dated 31/12/2022,</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 11 of 37</div><div>01/01/2023, 02/01/2023 and on</div><div>03/01/2023, in connection with RC0292022A0011 GNR. It is further directed</div><div>that accused shall be set free at 7.00 pm</div><div>on respective dates. </div><div>Further as per the direction of Honourable</div><div>Gujarat High Court, upon completion of</div><div>aforesaid period of remand, the accused be</div><div>set free upon expiry of remand period and</div><div>report be submitted to this Court along</div><div>with copies of medical examination paper/</div><div>Certificate. The case diary be handed back</div><div>to the Investigating Officer. </div><div>The accused is hereby directed to give full</div><div>cooperation to Investigating officer to carry</div><div>out proper investigation of this case.</div><div>The Investigating Officer is hereby directed</div><div>to strictly adhere to the guidelines laid</div><div>down by the Hon’ble Supreme Court of</div><div>India in case of D.K. Basu vs. State of</div><div>W.B. reported in AIR 1997 SC 610 and</div><div>Honourable Gujarat High Court, while the</div><div>accused is in custody and refrain from any</div><div>custodial illtreatment or torture”</div><div>18. CBI, thereafter, preferred an application for</div><div>suspension of the aforesaid order before Special CBI</div><div>Court on the ground that they wish to challenge it</div><div>before the High Court of Gujarat. Hence, Special</div><div>Judge, CBI Court No. 3 stayed operation of its order</div><div>till 7th January, 2023. This was later extended by</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 12 of 37</div><div>the Court till the final disposal of the Special Leave</div><div>Petition (Crl.) No. 295 of 2023.</div><div>SUBMISSIONS</div><div>19. Assailing the impugned order granting</div><div>anticipatory bail to Respondent No. 1, Mr. Tushar</div><div>Mehta, learned Solicitor General of India on behalf</div><div>of the CBI made the following submissions:</div><div>i. Considering the gravity and seriousness of</div><div>the offence and the position held by</div><div>Respondent No. 1, the High Court erred in</div><div>exercising its discretionary jurisdiction</div><div>under Section 438 of the CrPC;</div><div>ii. The High Court did not appreciate the</div><div>material collected against Respondent No. 1</div><div>which establishes a clear demand &</div><div>acceptance of bribe by him in view of his</div><div>voice recordings seeking an amount of Rs.</div><div>30 lakhs from the complainant and</div><div>acknowledging payment thereof. The</div><div>relevant voice recordings have been</div><div>analysed and the voices have been identified</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 13 of 37</div><div>to be those of Respondent No. 1 and the</div><div>complainant; </div><div>iii. The High Court grossly erred in observing</div><div>that the FIR was registered after a long delay</div><div>on 12th October, 2022. On that day, the CBI</div><div>had only reregistered FIR No. 12/2022</div><div>which was initially registered by ACB Police</div><div>Station on 4th October, 2022. </div><div>iv. Respondent No. 1’s name was included in</div><div>the ‘Agreed List’ in respect of Group A</div><div>officers of the Income Tax Department for</div><div>the year 2015 and thus, his service record is</div><div>not clean;</div><div>v. Respondent No. 1 evaded arrest when the</div><div>ACB team raided his office after he had</div><div>acknowledged the payment of the bribe</div><div>money over a WhatsApp call. Respondent</div><div>No. 1 & his colleagues used criminal force to</div><div>deter the ACB team from effecting arrest and</div><div>collecting material evidence. While doing so,</div><div>Respondent No. 1 handed over his mobile</div><div>phone, which is a crucial piece of evidence,</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 14 of 37</div><div>to his colleague to ensure that the same was</div><div>not seized by the investigating agency. This</div><div>has been recorded in the CCTV cameras of</div><div>the office;</div><div>vi. The audio recordings and video footage have</div><div>been examined by the Directorate of</div><div>Forensic Science, Gujarat certifying their</div><div>genuineness. The report concludes that</div><div>there are no signs of alteration in the same;</div><div>vii. Respondent No. 1 falsely pleaded that he</div><div>had taken casual leave from the competent</div><div>authority and misled the investigating</div><div>agency by sending a reply to the notice</div><div>issued under Section 41A, CrPC through the</div><div>email ID of Blue Heaven Hotel, Jaipur. Upon</div><div>investigation, it was found that Respondent</div><div>No. 1 had never stayed at that hotel; </div><div>viii. During investigation, reliable evidence has</div><div>come on record to show that other Income</div><div>Tax officials were hands in glove with</div><div>Respondent No. 1, which is also evident</div><div>from the active role played by some officials</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 15 of 37</div><div>in helping Respondent No.1 to avoid arrest</div><div>by the ACB on 4th October, 2022. Custodial</div><div>interrogation is highly necessary to</div><div>ascertain the deeper plot at play and to</div><div>examine the involvement of other Income</div><div>Tax officials;</div><div>ix. Respondent No. 1 appeared before the CBI</div><div>after the protection granted by the High</div><div>Court but did not handover his mobile</div><div>handsets which are a crucial piece of</div><div>evidence and is, thus, not cooperating with</div><div>the investigation. Custodial interrogation is</div><div>necessary in this case to take the</div><div>investigation to its logical conclusion;</div><div>x. Reliance has been placed on the judgment of</div><div>this Court in State Rep. By The CBI v.</div><div>Anil Sharma1</div><div> to argue that “custodial</div><div>interrogation is qualitatively more</div><div>elicitationoriented than questioning a</div><div>suspect who is well ensconced with a</div><div>favourable order under Section 438 of the</div><div>1 (1997) 7 SCC 187.</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 16 of 37</div><div>Code. In a case like this, effective</div><div>interrogation of a suspected person is of</div><div>tremendous advantage in disinterring many</div><div>useful information and also materials which</div><div>would have been concealed. Success in such</div><div>interrogation would elude if the suspected</div><div>person knows that he is well protected and</div><div>insulated by a prearrest bail order during</div><div>the time he is interrogated. Very often</div><div>interrogation in such a condition would</div><div>reduce to a mere ritual.”;</div><div>xi. Reliance has also been placed on the</div><div>decisions in Prem Shankar Prasad v.</div><div>State of Bihar2</div><div>, State of Madhya</div><div>Pradesh v. Pradeep Sharma3</div><div> and Lavesh</div><div>v. State (NCT of Delhi)4</div><div> to urge that</div><div>anticipatory bail should not be granted to an</div><div>absconder;</div><div>xii. The High Court passed an unusual order</div><div>directing that the investigating agency would</div><div>2 2021 SCC OnLine SC 955.</div><div>3 (2014) 2 SCC 171.</div><div>4 (2012) 8 SCC 730.</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 17 of 37</div><div>be at liberty to apply to the competent</div><div>Magistrate for police remand of Respondent</div><div>No. 1 and in the same breath, prevented</div><div>custodial interrogation of the main suspect.</div><div>20. Supporting the above submissions on behalf of</div><div>the CBI, Mr. Maninder Singh, learned Senior</div><div>Counsel appearing for the complainant, made</div><div>following additions: </div><div>i. The High Court ignored the observations &</div><div>findings of the learned Sessions Court</div><div>recorded while rejecting Respondent No. 1’s</div><div>application for anticipatory bail. The said</div><div>Court had gone through the material on</div><div>record, including the case papers, and then</div><div>only observed that custodial interrogation</div><div>was necessary to enable the investigation</div><div>agency to reach the core of the matter. </div><div>ii. The High Court failed to appreciate the</div><div>unequivocal demand of Rs. 30 lakhs made</div><div>by Respondent No. 1, which was recorded by</div><div>the complainant on a Digital Voice Recorder</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 18 of 37</div><div>and acceptance of that bribe money through</div><div>Dhara Angadia Firm.</div><div>21. On the other hand, Mr. Mukul Rohatgi and Mr.</div><div>Shyam Divan, learned Senior Counsels strongly</div><div>refuted the insinuations made against Respondent</div><div>No. 1 and defended the High Court order granting</div><div>prearrest bail with the following submissions:</div><div>i. The allegations levelled against Respondent</div><div>No. 1 are false and concocted. Respondent</div><div>No. 1 never raised any demand for</div><div>gratification as alleged by the complainant.</div><div>Respondent No. 1 had no connection with</div><div>the search and seizure action taken against</div><div>the complainant’s company in September</div><div>2021 or with the preparation of the</div><div>appraisal report. Respondent No. 1 is not</div><div>the Assessing Officer of the complainant’s</div><div>case and the matter is entrusted to some</div><div>other officer;</div><div>ii. There is no evidence of demand or</div><div>acceptance of bribe which are sine qua non</div><div>for establishing the offence. In trap cases</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 19 of 37</div><div>under Section 7 of Prevention of Corruption</div><div>Act, the conversation of demand is to be</div><div>recorded by the complainant in the presence</div><div>of independent panchas and the trap laying</div><div>Officer has to ensure that there is no</div><div>possibility of any tampering. In the present</div><div>case, the voice recording of the alleged</div><div>demand has been done without any police</div><div>involvement and thus, holds no evidentiary</div><div>value. The alleged deposit of the amount</div><div>was made in an Angadia firm which is</div><div>unknown to Respondent No. 1 and cannot</div><div>be termed as acceptance of bribe.</div><div>Respondent No. 1 has no connection with</div><div>Malav Ajitbhai Mehta, who is stated to be</div><div>the owner of the account wherein the</div><div>amount was deposited and Respondent No.</div><div>1 was not present at the site of the Angadia</div><div>firm;</div><div>iii. The complainant has animosity with</div><div>Respondent No. 1 due to the past survey</div><div>action taken for the financial year 201819</div><div>against his company which led to disclosure</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 20 of 37</div><div>of additional income of Rs. 50 crores. This</div><div>fact has not been disclosed in the FIR. The</div><div>complainant has falsely implicated</div><div>Respondent No. 1 due to his apprehensions</div><div>that Respondent No. 1 will impose huge tax</div><div>liability on him & his company;</div><div>iv. A perusal of FIR No. 12/2022 shows that it</div><div>was registered on 4th October, 2022 at 9:30</div><div>pm while the acts of the alleged demand,</div><div>laying down of the trap, deposit of money at</div><div>Dhara Angadia and the raid at Respondent</div><div>No. 1’s office occurred on 3rd October, 2022</div><div>and during the daytime on 4th October,</div><div>2022. Additionally, there is no record of the</div><div>complainant meeting police officials prior to</div><div>the registration of FIR. The delay in</div><div>registration of FIR which is more than 24</div><div>hours after the alleged demand of illegal</div><div>gratification, has not been explained;</div><div>v. Only Respondent No. 1 is sought to be</div><div>arrested by the CBI. The owner or employees</div><div>of Dhara Angadia firm have not been</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 21 of 37</div><div>arrested and the High Court order granting</div><div>anticipatory bail to Malav Mehta has not</div><div>been challenged by the CBI before this</div><div>Court; </div><div>vi. CBI has misused the provisions of Section</div><div>41A of the CrPC to arrest Respondent No. 1.</div><div>A bare perusal of the provision and the</div><div>guidelines laid down by this Court in</div><div>Arnesh Kumar v. State of Bihar5</div><div> suggest</div><div>that a notice under Section 41A would be</div><div>issued only when the investigating agency</div><div>does not require the custody of a person. In</div><div>the present case, notices under Section 41A</div><div>were issued post the raid conducted by ACB</div><div>team at Respondent No. 1’s office by which</div><div>time they had decided to arrest him;</div><div>vii. As per settled law of this Court, Respondent</div><div>No. 1 cannot be termed as an absconder as</div><div>he was availing his legal remedies. However,</div><div>despite this, the investigating agency</div><div>published notices in the media and pasted</div><div>5 (2014) 8 SCC 273.</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 22 of 37</div><div>‘Wanted’ posters with Respondent No. 1’s</div><div>name, photo and designation at various</div><div>places, which indicates mala fides of the</div><div>investigation agency;</div><div>viii. The bona fides of Respondent No. 1 are</div><div>evident from his conduct post the grant of</div><div>anticipatory bail. As directed by the High</div><div>Court, Respondent No. 1 appeared before</div><div>the CBI on at least four occasions, as and</div><div>when called. Respondent No. 1 has also</div><div>voluntarily given his voice samples. Given</div><div>the fact that Respondent No. 1 is</div><div>cooperating with the investigation, custodial</div><div>interrogation is not required. The High</div><div>Court erred in directing that, despite the</div><div>grant of anticipatory bail, the investigating</div><div>agency would be at liberty to apply to the</div><div>competent Magistrate for police remand.</div><div>This part of the order was to the</div><div>disadvantage of Respondent No. 1 but he</div><div>abided by the same and appeared before the</div><div>Court when the CBI applied for police</div><div>remand; </div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 23 of 37</div><div>ix. Respondent No. 1 has an impeccable service</div><div>record as is evident from his posting to one</div><div>of the most sensitive assignments in the</div><div>department. Such postings are only given to</div><div>senior officers with clean images. His</div><div>integrity is beyond doubt and he has an</div><div>unblemished past record. There is no case of</div><div>disproportionate assets against Respondent</div><div>No. 1; </div><div>x. Section 17A of the Prevention of Corruption</div><div>Act, 1988 as amended in 2018, provides for</div><div>a bar on any enquiry, inquiry or</div><div>investigation by a police officer into an</div><div>alleged offence by a public servant, where</div><div>the alleged offence relates to any decision</div><div>taken or recommendation made in exercise</div><div>of official functions or duties, without the</div><div>previous approval of the competent</div><div>authority. In this case, the investigating</div><div>agency has not complied with the</div><div>mandatory procedure of Section 17A and</div><div>has initiated investigation on the complaint</div><div>without any prior approval of the Competent</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 24 of 37</div><div>Authority. The breach of these mandatory</div><div>conditions vitiates the proceedings initiated</div><div>against Respondent No. 1; </div><div>xi. In these circumstances, the High Court has</div><div>rightly granted anticipatory bail to</div><div>Respondent No. 1 and has provided</div><div>adequate reasoning for the same in</div><div>paragraph 12 of the impugned order; </div><div>xii. Cancellation of bail has to be dealt with on a</div><div>completely different footing in comparison to</div><div>refusal of bail and ‘cogent and</div><div>overwhelming’ reasons are necessary to</div><div>cancel bail once granted. Reliance has been</div><div>placed in this regard on Dolat Ram v.</div><div>State of Haryana6</div><div> wherein a twojudge</div><div>Bench of this Court held that:</div><div>“4. Rejection of bail in a nonbailable</div><div>case at the initial stage and the</div><div>cancellation of bail so granted, have</div><div>to be considered and dealt with on</div><div>different basis. Very cogent and</div><div>overwhelming circumstances are</div><div>necessary for an order directing the</div><div>cancellation of the bail, already</div><div>6 (1995) 1 SCC 349.</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 25 of 37</div><div>granted. Generally speaking, the</div><div>grounds for cancellation of bail,</div><div>broadly (illustrative and not</div><div>exhaustive) are: interference or</div><div>attempt to interfere with the due</div><div>course of administration of justice or</div><div>evasion or attempt to evade the due</div><div>course of justice or abuse of the</div><div>concession granted to the accused in</div><div>any manner. The satisfaction of the</div><div>court, on the basis of material placed</div><div>on the record of the possibility of the</div><div>accused absconding is yet another</div><div>reason justifying the cancellation of</div><div>bail. However, bail once granted</div><div>should not be cancelled in a</div><div>mechanical manner without</div><div>considering whether any supervening</div><div>circumstances have rendered it no</div><div>longer conducive to a fair trial to</div><div>allow the accused to retain his</div><div>freedom by enjoying the concession of</div><div>bail during the trial.”</div><div>xiii. No supervening circumstances for</div><div>cancellation of bail have been pointed out by</div><div>the CBI or the complainant. </div><div>ANALYSIS</div><div>22. The law on grant of anticipatory bail has been</div><div>summedup by this Court in Siddharam</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 26 of 37</div><div>Satlingappa Mhetre v. State of Maharashtra7</div><div>,</div><div>after due deliberation on the parameters evolved by</div><div>the Constitution Bench in Gurbaksh Singh Sibbia</div><div>v. State of Punjab8</div><div>. This Court held thus:</div><div>“112. The following factors and parameters</div><div>can be taken into consideration while</div><div>dealing with anticipatory bail:</div><div>(i) The nature and gravity of the accusation</div><div>and the exact role of the accused must be</div><div>properly comprehended before arrest is</div><div>made; </div><div>(ii) The antecedents of the applicant</div><div>including the fact as to whether the</div><div>accused has previously undergone</div><div>imprisonment on conviction by a court in</div><div>respect of any cognizable offence; </div><div>(iii) The possibility of the applicant to flee</div><div>from justice; </div><div>(iv) The possibility of the accused's</div><div>likelihood to repeat similar or other</div><div>offences;</div><div>(v) Where the accusations have been made</div><div>only with the object of injuring or</div><div>humiliating the applicant by arresting him</div><div>or her; </div><div>(vi) Impact of grant of anticipatory bail</div><div>particularly in cases of large magnitude</div><div>affecting a very large number of people; </div><div>7 (2011) 1 SCC 694.</div><div>8 (1980) 2 SCC 565.</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 27 of 37</div><div>(vii) The courts must evaluate the entire</div><div>available material against the accused very</div><div>carefully. The court must also clearly</div><div>comprehend the exact role of the accused</div><div>in the case. The cases in which the accused</div><div>is implicated with the help of Sections 34</div><div>and 149 of the Penal Code, 1860 the court</div><div>should consider with even greater care and</div><div>caution because overimplication in the</div><div>cases is a matter of common knowledge</div><div>and concern; </div><div>(viii) While considering the prayer for grant</div><div>of anticipatory bail, a balance has to be</div><div>struck between two factors, namely, no</div><div>prejudice should be caused to the free, fair</div><div>and full investigation and there should be</div><div>prevention of harassment, humiliation and</div><div>unjustified detention of the accused; </div><div>(ix) The court to consider reasonable</div><div>apprehension of tampering of the witness</div><div>or apprehension of threat to the</div><div>complainant;</div><div>(x) Frivolity in prosecution should always</div><div>be considered and it is only the element of</div><div>genuineness that shall have to be</div><div>considered in the matter of grant of bail</div><div>and in the event of there being some doubt</div><div>as to the genuineness of the prosecution, in</div><div>the normal course of events, the accused is</div><div>entitled to an order of bail.”</div><div>23. In Sushila Aggarwal v. State (NCT of</div><div>Delhi)9</div><div>, the Constitution Bench reiterated that while</div><div>9 (2020) 5 SCC 1.</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 28 of 37</div><div>deciding applications for anticipatory bail, courts</div><div>should be guided by factors like the nature and</div><div>gravity of the offences, the role attributed to the</div><div>applicant, and the facts of the case.</div><div>24. The timetested principles are that no</div><div>straitjacket formula can be applied for grant or</div><div>refusal of anticipatory bail. The judicial discretion of</div><div>the Court shall be guided by various relevant factors</div><div>and largely it will depend upon the facts and</div><div>circumstances of each case. The Court must draw a</div><div>delicate balance between liberty of an individual as</div><div>guaranteed under Article 21 of the Constitution and</div><div>the need for a fair and free investigation, which</div><div>must be taken to its logical conclusion. Arrest has</div><div>devastating and irreversible social stigma,</div><div>humiliation, insult, mental pain and other fearful</div><div>consequences. Regardless thereto, when the Court,</div><div>on consideration of material information gathered by</div><div>the Investigating Agency, is prima facie satisfied that</div><div>there is something more than a mere needle of</div><div>suspicion against the accused, it cannot jeopardise</div><div>the investigation, more so when the allegations are</div><div>grave in nature. </div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 29 of 37</div><div>25. Keeping these principles in mind, we proceed</div><div>to evaluate the rival submissions. At the outset, it is</div><div>to be noted that the High Court fell in a factual error</div><div>in observing that FIR was registered on</div><div>12th October, 2022 for the offence alleged to have</div><div>taken place on 3rd and 4th October, 2022. The FIR</div><div>was registered by the ACB against Respondent No. 1</div><div>on 4th October, 2022 under Sections 7, 13(1) and</div><div>13(2) of the Prevention of Corruption Act, 1988 and</div><div>was reregistered by CBI on 12th October, 2022.</div><div>26. Further, the primary ground assigned by the</div><div>High Court to grant anticipatory bail to Respondent</div><div>No. 1 is that there was doubt as to the acceptance of</div><div>the bribe amount since records of Dhara Angadia</div><div>firm had not been produced establishing any link</div><div>between Respondent No. 1 & the firm. </div><div>27. The CBI has produced the case diary which</div><div>contains the statement made by Smit Thakkar, who</div><div>handles Dhara Angadia firm. He has clearly stated</div><div>that Malav Mehta was the owner of Vardhman</div><div>account and had informed him that 30 lakhs rupees</div><div>would be deposited in his account on 4th October,</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 30 of 37</div><div>2022, which in turn had to be sent to someone else.</div><div>The purported recording of conversation between</div><div>the complainant and Respondent No. 1 wherein</div><div>Respondent No. 1 thanked the complainant, after</div><div>the deposit of amount in the Vardhman account, is</div><div>a reasonable link to connect Respondent No. 1 with</div><div>the deposit of illegal gratification in Dhara Angadia</div><div>firm, thereby prima facie showing acceptance</div><div>thereof.</div><div>28. Regarding the alleged discrepancy of delay of</div><div>more than 24 hours in the registration of FIR, we</div><div>find from the material produced before us that the</div><div>complainant started narrating the complaint at</div><div>07:15 hours and it ended at 08:00 hours on</div><div>4</div><div>th October, 2022. The panchnama, annexed in the</div><div>case diary, provides details of the trap laid by the</div><div>ACB and lists all the activities of the ACB team on</div><div>that day, thereby dispelling any doubts of mala</div><div>fides on the part of the investigating agencies.</div><div>29. We have also gone through the statement of</div><div>Mr. Vivek Johri, Assistant Commissioner of Income</div><div>Tax who has stated that Respondent No. 1 handed</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 31 of 37</div><div>over his mobile phone to him before leaving the</div><div>office, which Mr. Johri later threw away. </div><div>30. The manner in which Respondent No. 1</div><div>forcefully evaded his arrest with the help of his</div><div>colleagues and got the evidence destroyed, is a</div><div>strong circumstance to indicate his complicity at</div><div>this stage though a clear picture would emerge only</div><div>on completion of investigation.</div><div>31. The nature and gravity of the alleged offence</div><div>should have been kept in mind by the High Court.</div><div>Corruption poses a serious threat to our society and</div><div>must be dealt with iron hands. It not only leads to</div><div>abysmal loss to the public exchequer but also</div><div>tramples good governance. The common man</div><div>stands deprived of the benefits percolating under</div><div>social welfare schemes and is the worst hit. It is</div><div>aptly said, “Corruption is a tree whose branches are</div><div>of an unmeasurable length; they spread everywhere;</div><div>and the dew that drops from thence, Hath infected</div><div>some chairs and stools of authority.” Hence, the</div><div>need to be extra conscious.</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 32 of 37</div><div>32. From the material placed on record, it seems</div><div>that prima facie, the allegations against Respondent</div><div>No. 1 cannot be brushed aside lightly at this stage.</div><div>There appears to be a wellorganised syndicate</div><div>comprising officers and officials of the Income Tax</div><div>Department, businessmen and Hawala traders, who</div><div>are in tandem. Such a nexus needs to be unearthed</div><div>through an unimpaired and unobstructed</div><div>investigation.</div><div>33. The contention that prior approval of</div><div>investigation, as mandated under Section 17A of</div><div>Prevention of Corruption Act, has not been obtained</div><div>and thus, the proceedings initiated against</div><div>Respondent No. 1 stand vitiated, has no legal or</div><div>factual basis. Section 17A merely contemplates that</div><div>police officers shall not conduct any enquiry, inquiry</div><div>or investigation into any offence alleged to have been</div><div>committed by a public servant where the alleged</div><div>offence is relatable to any recommendation made or</div><div>decision taken in discharge of official functions or</div><div>duties, without the previous approval of the</div><div>competent authority. The first proviso to the section</div><div>states that such approval is not necessary in cases</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 33 of 37</div><div>involving arrest of the person on the spot on the</div><div>charges of accepting undue advantage.</div><div>34. As may be seen, the first proviso to Section</div><div>17A refers to cases wherein a public servant is</div><div>charged with acceptance of an undue advantage or</div><div>attempt thereof. A prior approval or sanction to</div><div>investigate such an officer in a trap case is likely to</div><div>defeat the very purpose of trap and the</div><div>investigation, which is not the underlying intention</div><div>of the legislature. The investigation against</div><div>Respondent No. 1, being an accused of demanding a</div><div>bribe, did not require any previous approval of the</div><div>Central Government. That apart, the accusation</div><div>against Respondent No. 1 does not revolve around</div><div>any recommendations made or decisions taken by</div><div>him in his quasijudicial or administrative capacity.</div><div>35. It is true that cancellation of bail must be done</div><div>only for cogent and overwhelming reasons.</div><div>Nevertheless, setting aside an unjustified order</div><div>granting bail is distinct from cancellation of bail.</div><div>This Court would not, invariably intervene into the</div><div>judicial discretion exercised by the High Court while</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 34 of 37</div><div>granting bail to an accused. All that to be ensured is</div><div>that the High Court exercises its discretion</div><div>judiciously, cautiously and strictly in conformity</div><div>with the basic principles laid down by this Court</div><div>from time to time in a series of decisions.</div><div>36. The Constitution Bench in Sushila Aggarwal</div><div>(supra) observed that:</div><div>“92.11. The correctness of an order</div><div>granting bail, can be considered by the</div><div>appellate or superior court at the behest of</div><div>the State or investigating agency, and set</div><div>aside on the ground that the court granting</div><div>it did not consider material facts or crucial</div><div>circumstances.”</div><div>SUMMATION</div><div>37. Having considered the nature of allegations,</div><div>material on record and the settled legal principles</div><div>on grant of anticipatory bail, we are of the view that,</div><div>howsoever hard or harsh it may be, the High Court</div><div>ought to have refrained itself from extending</div><div>protection against arrest to Respondent No. 1 in</div><div>exercise of its discretionary jurisdiction under</div><div>Section 438 of the CrPC. </div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 35 of 37</div><div>38. Assuming Respondent No. 1 had some valid</div><div>apprehensions that the actions of ACB (State Police)</div><div>were actuated with extraneous reasons, he can no</div><div>longer say so once the investigation has been</div><div>transferred to CBI. We do not find any allegation of</div><div>personal vendetta, victimisation, bias or ulterior</div><div>motive against the Central Agency. In any case, CBI</div><div>is expected to carry out a free, fair and</div><div>dispassionate investigation with faithful observance</div><div>to the rights of an accused, who is subjected to</div><div>custodial interrogation.</div><div>39. The appeals are, accordingly, allowed. The</div><div>impugned judgment and order of the High Court</div><div>dated 19th December, 2022 is set aside and the</div><div>anticipatory bail application of Respondent No. 1 is</div><div>dismissed. As a consequence thereto, the order</div><div>dated 30th December, 2022 passed by the Special</div><div>Judge, CBI Court No. 3 partly allowing CBI’s</div><div>application for remand is also set aside. </div><div>40. We clarify that this Court has expressed only</div><div>prima facie opinion on the merits of the allegations</div><div>for the limited purpose to refuse or grant prearrest</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 36 of 37</div><div>bail. If Respondent No. 1 moves an application for</div><div>grant of regular bail before an appropriate Court,</div><div>the same shall be considered on its own merits and</div><div>in accordance with law, uninfluenced by the</div><div>observations made hereinabove.</div><div>41. The appeals are disposed of in the above</div><div>terms.</div><div>42. Pending application(s), if any, stand disposed</div><div>of as well.</div><div>…....…………………..J.</div><div>(SURYA KANT)</div><div>…....…………………..J.</div><div>(J.K. MAHESHWARI)</div><div>New Delhi;</div><div>April 17, 2023.</div><div>Crl. A. No._____ of 2023 @ SLP (Crl.) No. 295 of 2023 etc. Page 37 of 37</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-43019533285000444572023-04-17T11:56:00.007-07:002023-04-17T11:56:59.941-07:00STATE OF RAJASTHAN VERSUS ASHARAM @ ASHUMAL<div>STATE OF RAJASTHAN VERSUS ASHARAM @ ASHUMAL </div><div><br /></div>
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<p style="text-align: justify;"><b><a href="https://www.indianconstitution.in/p/landmark-judgments.html">Landmark Cases</a> of India / </b><span style="text-align: left;"><b><a href="https://www.indianconstitution.in/2021/09/100-100-landmark-cases-of-supreme-court.html">सुप्रीम कोर्ट के ऐतिहासिक फैसले</a></b></span></p>
<div><br /></div><div><br /></div><div>Criminal Appeal @ SLP (Crl.) No. 2044 of 2022 Page 1 of 20</div><div>REPORTABLE</div><div>IN THE SUPREME COURT OF INDIA</div><div>CRIMINAL APPELLATE JURISDICTION</div><div>CRIMINAL APPEAL NO. OF 2023</div><div>(ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO. 2044 OF 2022)</div><div>STATE OF RAJASTHAN ..... APPELLANT</div><div>VERSUS</div><div>ASHARAM @ ASHUMAL ..... RESPONDENT</div><div>J U D G M E N T</div><div>SANJIV KHANNA, J.</div><div>Leave granted.</div><div>2. The present appeal preferred by the State of Rajasthan takes</div><div>exception to the judgment dated 10.02.2022 passed by the High</div><div>Court of Rajasthan at Jodhpur1</div><div>, allowing the application2</div><div>filed by</div><div>the respondent – Asharam @ Ashumal under Section 391 of the</div><div>Code of Criminal Procedure, 19733</div><div>, and directing summoning and</div><div>recording of evidence of Ajay Pal Lamba, who was posted as</div><div>Deputy Commissioner of Police (West), Jodhpur, Rajasthan in</div><div>August 2013 and has written a book “Gunning For The Godman:</div><div>1 For short, ‘the High Court’.</div><div>2 D.B. Criminal Misc. Application No. 1 of 2021 in D.B. Criminal Appeal No. 123 of 2018.</div><div>3 For short, ‘Cr.P.C.’.</div><div>Criminal Appeal @ SLP (Crl.) No. 2044 of 2022 Page 2 of 20</div><div>The True Story Behind Asaram Bapu’s Conviction”4</div><div>.</div><div>3. The respondent – Asharam @ Ashumal was charge-sheeted on</div><div>06.11.2013, and after a trial lasting almost five years, vide judgment</div><div>dated 25.04.2018 passed by the Magistrate, Special Court,</div><div>Protection of Children from Sexual Offences Act, 20125</div><div>, Jodhpur,</div><div>Rajasthan, he has been convicted for the offences under Sections</div><div>370(4), 342, 354-A, 376(2)(f), 376-D, 506, 509/34 and 120-B of the</div><div>Indian Penal Code, 1860, Sections 23 and 26 of the Juvenile</div><div>Justice (Care and Protection of Children) Act, 20006</div><div>, and Sections</div><div>5(f)/6, 5(g)/6, and 8 of the POCSO Act. He stands sentenced to</div><div>undergo rigorous imprisonment for different periods, and life</div><div>imprisonment for the remainder of his natural life, with fine and</div><div>default stipulations.</div><div>4. Earlier, the victim had given a handwritten complaint (Exhibit P-4)</div><div>on the intervening night of 19/20.08.2013 at 11:55 p.m., pursuant</div><div>to which ‘Zero’ F.I.R. dated 20.08.2013 (Exhibit P-11) was</div><div>registered at Police Station Kamla Market, Central District, Delhi at</div><div>2:50 a.m. The victim was spoken to and had interacted with a NonGovernmental Organization7</div><div>, and a report dated 20.08.2013</div><div>4 For short ‘the Book’.</div><div>5 For short, ‘POCSO Act’.</div><div>6 For short, ‘JJ Act’.</div><div>7 For short, ‘N.G.O.’.</div><div>Criminal Appeal @ SLP (Crl.) No. 2044 of 2022 Page 3 of 20</div><div>(Exhibit D-4) was prepared by the N.G.O. On the same day, the</div><div>victim had appeared before the Metropolitan Magistrate in New</div><div>Delhi, and her statement under Section 164 of the Cr.P.C. (Exhibit</div><div>P-7) was recorded. As the offence was committed in Jodhpur, the</div><div>investigation was transferred to the Police Station of competent</div><div>jurisdiction and, consequently, F.I.R. No. 122 of 2013 (Exhibit P106) was registered at Police Station Mahila Pashchim, Jodhpur</div><div>District, Rajasthan on 21.08.2013 at 6:15 p.m.</div><div>5. The investigation in the case was conducted by Chanchal Mishra,</div><div>the then Assistant Commissioner of Police8</div><div>, (West), Jodhpur,</div><div>Rajasthan, who has deposed as PW-43. As per the prosecution’s</div><div>version, the Investigating Officer – Chanchal Mishra (PW-43) had</div><div>recorded the statement of the victim under Section 161 of the</div><div>Cr.P.C. on 21.08.2013. For some reason, the entire statement of</div><div>the victim under Section 161 of the Cr.P.C. recorded on 21.08.2013</div><div>has been marked as Exhibit D-2</div><div>9</div><div>. The Investigating Officer –</div><div>Chanchal Mishra (PW-43) was examined and cross-examined on</div><div>as many as eleven dates between 09.07.2015 and 03.03.2016. The</div><div>victim, who has deposed as PW-5, was examined and cross8 For short, ‘ACP’.</div><div>9 Whether the entire statement recorded under Section 161 of the Cr.P.C. can be exhibited, and can</div><div>be read in evidence is not the subject matter of the present appeal and we make no comments and</div><div>observations on this aspect.</div><div>Criminal Appeal @ SLP (Crl.) No. 2044 of 2022 Page 4 of 20</div><div>examined on eleven dates between 11.04.2014 and 13.06.2014.</div><div>6. As a limited issue arises for our consideration, and keeping in mind</div><div>that the appeal preferred by the respondent – Asharam @ Ashumal</div><div>is pending adjudication before the High Court, we would refrain from</div><div>referring to the evidence in detail, and avoid expressing any opinion</div><div>on merits, albeit we would confine ourselves to the record on the</div><div>issue raised before us.</div><div>7. In 202110</div><div>, the respondent – Asharam @ Ashumal filed an</div><div>application under Section 391 of the Cr.P.C.11, in which the</div><div>impugned judgment has been passed, alleging that the victim (PW5) had never been inside the house described as ‘Kutiya’ and</div><div>therefore, the entire case against the respondent – Asharam @</div><div>Ashumal that he had sexually abused and raped the victim (PW-5),</div><div>is false and concocted. The application asserts that the victim (PW5) was brought to the ‘Kutiya’ for the first time by the police for the</div><div>spot panchnama/Mauka Naksha on 22.08.2013, which visit was</div><div>duly video-graphed (Exhibit P-70) and after that, a transcription vide</div><div>compact disc (Article-16) was prepared, and the site maps (Exhibits</div><div>P-13 and P-14), were drawn. It is alleged that the victim (PW-5) was</div><div>tutored based on the videography of the scene of the crime shown</div><div>10The exact date of filing the application is not available on record.</div><div>11For short, ‘the application’.</div><div>Criminal Appeal @ SLP (Crl.) No. 2044 of 2022 Page 5 of 20</div><div>to the victim a day prior to the preparation of the spot</div><div>panchnama/Mauka Naksha and site maps on 22.08.2013. In this</div><div>context, the application records that Ajay Pal Lamba, who was the</div><div>then Deputy Commissioner of Police (West), Jodhpur, Rajasthan,</div><div>in the Book, has disclosed having recorded a video of the scene of</div><div>the crime on his mobile phone on his first visit to the ‘Kutyia’ on</div><div>21.08.2013, which is a day prior to the drawing of the site maps</div><div>(Exhibits P-13 and P-14) on 22.08.2013. The assertion in the</div><div>application is that the site maps (Exhibits P-13 and P-14) are false</div><div>and ought to be discarded. It is alleged that there is a discrepancy</div><div>between video recording (Article-15) and statement of the victim</div><div>(PW-5) recorded under Section 161 of the Cr.P.C. dated</div><div>21.08.2013 (Exhibit D-2). If the description of the ‘Kutiya’, as given</div><div>by the victim (PW-5), which, as per prosecution’s case, was made</div><div>in her statement under Section 161 of the Cr.P.C. for the first time</div><div>on 21.08.2013 (Exhibit D-2), is falsified and rejected, the</div><div>prosecution’s case would not be able to link the victim (PW-5)'s</div><div>presence with the respondent – Asharam @ Ashumal at the scene</div><div>of the crime on 15.08.2013, the date when the offences were</div><div>allegedly committed.</div><div>8. The impugned judgment refers to quotes from a portion of the Book,</div><div>wherein Ajay Pal Lamba has stated that on learning about the</div><div>Criminal Appeal @ SLP (Crl.) No. 2044 of 2022 Page 6 of 20</div><div>offence, he had swung into action and had sent a police team to</div><div>scan and examine the location. Ajay Pal Lamba had asked SubInspector Madan Beniwal to seal and secure the entire campus until</div><div>the investigation was completed. The impugned judgment dated</div><div>10.02.2022, at the same time, quotes Ajay Pal Lamba’s assertion</div><div>in the Book – “In any case, one would not be very wrong to assume</div><div>that not much of the forensic evidence would be found at the [scene</div><div>of the crime] because of...the sheer delay in filing the FIR...”, as the</div><div>offence was stated to have occurred on 15.08.2013, while the F.I.R.</div><div>No. 122 of 2013 (Exhibit P-106) was registered on 21.08.2013.</div><div>Nevertheless, the application under Section 391 of the Cr.P.C. for</div><div>summoning and recording evidence of Ajay Pal Lamba has been</div><div>allowed primarily relying on the following statement by Ajay Pal</div><div>Lamba in the Book:</div><div>“….. While I was there, I thought it would be prudent to</div><div>film a video of the place on my mobile phone, should I</div><div>need to refer to it at some point during the course of the</div><div>investigation. And so, I did.”</div><div>9. The impugned judgment refers to judgments concerning Sections</div><div>311 and 391 of the Cr.P.C., to observe that while it will be premature</div><div>for the High Court to comment on whether the victim (PW-5) was</div><div>tutored on the basis of some video recording of the crime scene, as</div><div>referred to in the book written by Ajay Pal Lamba, his examination</div><div>Criminal Appeal @ SLP (Crl.) No. 2044 of 2022 Page 7 of 20</div><div>and the recording itself would be valuable as evidence, given the</div><div>fact that the defence had given definite suggestions to the victim</div><div>(PW-5) and the Investigating Officer – Chanchal Mishra (PW-43)</div><div>that a video recording of the crime scene was shown to the victim</div><div>(PW-5) and on the basis thereof, the victim (PW-5) was familiarized</div><div>with the crime scene. The impugned judgment observes that the</div><div>defence had relied on contradictions between the first version given</div><div>by the victim (PW-5) in the ‘Zero’ FIR (Exhibit P-11) and the</div><div>statement of the victim (PW-5) under Section 164 of the Cr.P.C.</div><div>(Exhibit P-7), vis-à-vis the statement under Section 161 of the</div><div>Cr.P.C (Exhibit D-2), stated to be recorded by the Investigating</div><div>Officer – Chanchal Mishra (PW-43) on 21.08.2013, which contains</div><div>a graphic description of the place/scene of the crime. The High</div><div>Court observes that the trial court had rejected the argument by the</div><div>defence that videography of the crime scene was done by the police</div><div>on 21.08.2013, and was shown to the victim (PW-5), and</div><div>consequently placed reliance on the victim (PW-5)’s description of</div><div>the scene of crime in view of her statement, Exhibit D-2, given to</div><div>the Investigating Officer – Chanchal Mishra (PW-43) under Section</div><div>161 of the Cr.P.C. on 21.08.2013. Accordingly, the High Court</div><div>allowed the application and has directed that Ajay Pal Lamba is to</div><div>be summoned as a witness, for the following reason:</div><div>Criminal Appeal @ SLP (Crl.) No. 2044 of 2022 Page 8 of 20</div><div>“……. Now with the publication of the book, referred to</div><div>supra, the defence has right to claim that video of the</div><div>crime scene was unquestionably recorded which fact is</div><div>sufficient to convince the Court that it is absolutely</div><div>essential in the interest of justice and for a just decision</div><div>of the case to exercise the power under Section 391</div><div>Cr.P.C. for summoning and examining Shri Ajay Pal</div><div>Lamba as a court witness in this case while giving</div><div>access of crossexamination to the defence as well as</div><div>the prosecution.”</div><div>10. In our opinion, the impugned judgment is unsustainable and</div><div>mistaken in both facts and law. The reasoning is based upon mere</div><div>conjectures, and that too without appreciating the scope and object</div><div>of Section 391 of the Cr.P.C. As stated above, we do not wish to</div><div>make observations on merits, albeit in view of the stand taken by</div><div>the respondent – Asharam @ Ashumal, we have to reproduce the</div><div>relevant observations made in the trial court judgment, to which our</div><div>attention was drawn, and reliance was placed by the learned Senior</div><div>Advocate appearing for the respondent – Asharam @ Ashumal in</div><div>support of his submissions. The relevant portion12 of the judgment</div><div>of the trial court reads:</div><div>“298- In my humble opinion circumstances make</div><div>statements more than the witnesses. It is notable that</div><div>PW-43 Chanchal Mishra Investigation Officer in her</div><div>statement has told that after conducting the inspection</div><div>of the place of incident Site Inspection of the place of</div><div>incident Ex.P-13, Memo of Site Inspection and Site Map</div><div>of place of incident and Ex.P-14 circumstances of the</div><div>site prepared on the identification of the Victim. She</div><div>says that she conducted the videography and</div><div>12 We may note that there appears to be misnumbering in the paragraphs of the trial court judgment</div><div>dated 25.04.2018.</div><div>Criminal Appeal @ SLP (Crl.) No. 2044 of 2022 Page 9 of 20</div><div>photography of the place of incident. After the</div><div>videogrpahy of the place of incident the witness said</div><div>transcription C.D. Article-16 was prepared. PW-30</div><div>Papparam said that C.D. of videography of the</div><div>circumstances told by the above victim was prepared in</div><div>his presence. He said that he played the above C.D. on</div><div>Laptop and typed the circumstances as told by the</div><div>victim on computer. He proved the sealed C.D. its</div><div>Memo of Transcription by exhibiting the same in</div><div>evidence as Ex.P--69 and Ex.P-70 respectively.</div><div>Witness PW-30 Ramdev has also confirmed the</div><div>statements of above witnesses. In this regard the</div><div>defence while giving emphasis on Ex.D-103 and ExD104 has argued that SHO of P.S. Soorsagar Sh. Madan</div><div>Benival and his police staff had reached at the spot.</div><div>After doing the videography of the spot they showed it</div><div>to the victim on the next day. Hence, the victim clearly</div><div>stated the circumstances inside Kutiya. In my humble</div><div>opinion there is no abstract in these pleas. This is</div><div>correct that it appears form Ex.D-103 and Ex.D-104 that</div><div>Staff of P.S. Soorsagar and SHO Madan Beniwal had</div><div>gone at the spot but he would have done the</div><div>videography of the place of incident or perused the</div><div>place of incident, such does not appear from both above</div><div>documents.</div><div>299- We have carefully perused the Ex.P-69 Memo of</div><div>Transcription, part of which is Ex.P-70 print out.</div><div>300- According to the above memo on dated 22.8.2013</div><div>at the time of site inspection videogrpahy regarding the</div><div>room, bathroom of Kutiya at the place of incident was</div><div>conducted from the witness and after typing the details</div><div>of the circumstances of the place of incident as told by</div><div>the Victim, in computer the print out was taken and the</div><div>detailed document of transcription has been included in</div><div>the case file. We perused the Ex.P-70 Transcription</div><div>(Print out of transcription).</div><div>301- This is clear that the Investigation Officer while</div><div>taking precautions has asked from the Victim her details</div><div>by taking her at Hariom Farm House without taking her</div><div>inside the Kutiya and has done its videography.</div><div>Transcription of the above videogrpahy of the details</div><div>without going inside is Ex.P-70. In the above</div><div>transcription Ex.P-70 we matched the facts told by the</div><div>victim about taking inside Kutiya from the Ex.P-13 and</div><div>Criminal Appeal @ SLP (Crl.) No. 2044 of 2022 Page 10 of 20</div><div>Ex.P-14 and photographs Ex.P-16 to Ex.P32. The</div><div>details of inside Kutiya which has been told by the victim</div><div>without going inside, the same circumstances appear</div><div>from the site map and circumstances of the site and</div><div>photographs and matches with it. In my humble opinion</div><div>it is proved from this evidence that the victim had gone</div><div>inside the room and had gone in the bathroom too. In</div><div>such a situation this statement of the defence is not</div><div>believable that the victim would have not even entered</div><div>in Kutiya.</div><div>301. The defence has said that photo of room is</div><div>published in Dainik Bhaskar on 22.8.2013 and has</div><div>asked from the Victim in cross-examination that due to</div><div>this she knew about inside the room. This is the clear</div><div>statement of the victim that this is wrong to say that</div><div>because of publishing photo in newspaper she came to</div><div>know about that room. She has been suggested that</div><div>what were the things in the room and where it were</div><div>situated, details of which have not been mentioned in</div><div>the FIR, NGO’s report and statements of Section 164</div><div>CrPC. The statement of the witness is this that</div><div>regarding bed and light is written in NGO report and she</div><div>has also told about Room’s light and bed in Section 164</div><div>of Criminal Procedure Code and also there is details of</div><div>locking the room. Thus the witness has clearly denied</div><div>that she would have come to know about the inside</div><div>things of the rooms after publishing photo in</div><div>newspaper.</div><div>302- The statement of the Defence is this that no one</div><div>was allowed to go inside the Kutiya whereas it has</div><div>become clear from the above deliberation that the</div><div>Victim without going inside Kutiya, has told that whole</div><div>inside details of Kutiya, which has been found</div><div>absolutely correct. This has been suggested to the</div><div>Victim in the cross-examination that she would have</div><div>seen Kutiya of accused Asaram situated Haridwara,</div><div>Shahjahanpur, from which she has denied. In this</div><div>situation now the Onus to give this clarification goes on</div><div>to the Defence to tell that how the Victim came to know</div><div>about the real and actual inside situation of Kutiya</div><div>without going inside? This is the clear principle of law</div><div>that a person can speak lie but circumstances never</div><div>speak lie. Above mentioned circumstances are</div><div>expressing this truth before the Court that the Victim</div><div>Criminal Appeal @ SLP (Crl.) No. 2044 of 2022 Page 11 of 20</div><div>had sent inside the above Kutiya wherein as per the</div><div>Defence no one was allowed to go.</div><div>303- Therefore, the prosecution has been successful to</div><div>prove this that the Victim had gone in the above</div><div>mentioned Kutiya situated at the place of incident</div><div>means the victim's visit to the above room is proved by</div><div>evidence.”</div><div>11. To elucidate the specific findings as recorded above, and reject the</div><div>arguments raised by the respondent – Asharam @ Ashumal and</div><div>the grounds/reasoning given by the High Court, we would advert to</div><div>paragraph 62 of the judgment of the trial court, which refers to the</div><div>testimony of the Investigating Officer – Chanchal Mishra (PW-43)</div><div>to the effect that she was posted as the ACP at Jodhpur</div><div>Commissionerate on 21.08.2013. After the recording of F.I.R. No.</div><div>122 of 2013 (Exhibit P-106), she had received two medical reports</div><div>of the victim (Exhibits P1 to P-3 and P-12 respectively), a copy of</div><div>the statement of the victim (PW-5) under Section 164 of the Cr.P.C.</div><div>(Exhibit P-7) etc. Thereupon, the Investigating Officer – Chanchal</div><div>Mishra (PW-43) had proceeded to record the statement of the victim</div><div>(PW-5) under Section 161 of the Cr.P.C. (Exhibit D-2). Thereafter,</div><div>the Investigating Officer – Chanchal Mishra (PW-43) had visited the</div><div>place of occurrence. Clearly, it is not the prosecution’s case and</div><div>version that the police team/officers had not visited the place of</div><div>occurrence or scene of the crime on 21.08.2013. When we refer to</div><div>the quoted paragraphs in the trial court judgment, paragraph ‘301.’</div><div>Criminal Appeal @ SLP (Crl.) No. 2044 of 2022 Page 12 of 20</div><div>specifically records that a photograph of the room where the</div><div>incident allegedly occurred was published in ‘Dainik Bhaskar’</div><div>newspaper on 22.08.2013, in which we note a police officer can be</div><div>seen. Therefore, the presence of a police team on 21.08.2013 in</div><div>the ‘Kutiya’ is not disputed; it is an accepted position. The case of</div><div>the prosecution, as held by the trial court in paragraphs 298 to 303,</div><div>as quoted above, is that the victim (PW-5) was not tutored and,</div><div>therefore, her version as to the details of the ‘Kutiya’ were narrated</div><div>by her to the police without being taken inside the room or the</div><div>bathroom. This version and stand of the prosecution, as accepted</div><div>by the trial court, is not on the ground and reason that the police</div><div>team had not gone inside the room or the bathroom on 21.08.2013,</div><div>but by rejecting the argument that a police officer or the</div><div>Investigating Officer had prompted or tutored the victim (PW-5) to</div><div>give the description and details of the room and bathroom. This</div><div>finding recorded by the trial court is based on the detailed</div><div>examination of the evidence of the victim (PW-5), as well as the</div><div>Investigating Officer – Chanchal Mishra (PW-43). Whether this</div><div>finding is correct will be tested in the appeal, albeit the reasoning</div><div>given in the impugned judgment to summon and examine Ajay Pal</div><div>Lamba as a court witness cannot be sustained on the ground that</div><div>Ajay Pal Lamba had purportedly recorded a video on his mobile</div><div>Criminal Appeal @ SLP (Crl.) No. 2044 of 2022 Page 13 of 20</div><div>phone. The statement made by Ajay Pal Lamba in the Book, as</div><div>quoted above, which statement is heavily relied upon by the learned</div><div>Senior Advocate for the respondent – Asharam @ Ashumal,</div><div>nowhere mentions that the video, which he had purportedly</div><div>recorded on his mobile phone, was handed over, given or</div><div>transferred by him to the Investigating Officer – Chanchal Mishra</div><div>(PW-43), or that it was shown by him to the victim (PW-5). In our</div><div>opinion, when the prosecution states that on 21.08.2013 the police</div><div>team had visited the scene of the crime, that is, the ‘Kutiya’, the plea</div><div>to examine Ajay Pal Lamba on the ground that he had purportedly</div><div>recorded a video of the ‘Kutiya’ on his mobile phone is completely</div><div>inconsequential and irrelevant to the factual matrix of the present</div><div>case. Further, the deposition given by a witness under oath in the</div><div>court constitutes and is read as evidence. Statements recorded</div><div>under Section 161 of the Cr.P.C. by a police officer during</div><div>investigation cannot be used as evidence, albeit the accused may</div><div>use a part of the statement in terms of the proviso to Section 162 of</div><div>the Cr.P.C.</div><div>12. We are not examining whether there is sufficient evidence and</div><div>material to uphold the conviction of the respondent – Asharam @</div><div>Ashumal, independent of the evidence and material referred to in</div><div>paragraphs 298 to 303 of the trial court judgment. We refrain and</div><div>Criminal Appeal @ SLP (Crl.) No. 2044 of 2022 Page 14 of 20</div><div>would not like to go into these aspects as these are questions of</div><div>merits to be considered by the High Court while adjudicating the</div><div>criminal appeal against conviction.</div><div>13. Similarly, on behalf of the appellant – State of Rajasthan, it was</div><div>submitted that Ajay Pal Lamba had made a specific disclaimer and</div><div>had stated that the Book is a dramatized version of the events. We</div><div>need not examine this aspect in view of our findings recorded</div><div>above.</div><div>14. This Court in Rajeswar Prasad Misra v. State of West Bengal and</div><div>Another13 has opined that as additional evidence may be</div><div>necessary for various reasons, the legislature has refrained from</div><div>curtailing such discretion of the appellate court. The touchstone of</div><div>when the additional evidence at the appellate stage may be taken</div><div>on record is not the impossibility or inability to pronounce the</div><div>judgment in its absence, but whether there would be a failure of</div><div>justice without such additional evidence. This discretion is not to be</div><div>exercised lightly but requires caution and care as it is to be</div><div>exercised only in cases when the appellate court finds, on good and</div><div>justifiable grounds, that there would be a failure of justice without</div><div>the additional evidence being taken on record. However, once this</div><div>13 (1966) 1 SCR 178.</div><div>Criminal Appeal @ SLP (Crl.) No. 2044 of 2022 Page 15 of 20</div><div>condition is satisfied, there is no restriction on the kind of evidence</div><div>received, which may be formal or substantial.</div><div>15. In Zahira Habibulla H. Sheikh and Another v. State of Gujarat</div><div>and Others14</div><div>, this Court has elaborately dealt with the aspect of</div><div>exercise of discretion, highlighting the balance which the courts</div><div>have to maintain so as to not deny the right to additional evidence</div><div>to do justice, and the importance of the right to fair hearing of the</div><div>accused as well the prosecution. The right to fair hearing is inherent</div><div>to the concept of due process of law and ascertainment of truth.</div><div>Equally, there can be failure of justice if this discretion to allow</div><div>additional evidence at the appellate stage is exercised in a routine</div><div>and liberal manner, without the court being satisfied that the prayer</div><div>has imprints of reasonableness and genuineness to at least</div><div>consider the worth, credibility and acceptability of the material</div><div>sought to be brought on record.</div><div>16. Both Sections 311 and 391 of the Cr.P.C. relate to power of the</div><div>court to take additional evidence; the former at the stage of trial and</div><div>before the judgment is pronounced; and the latter at the appellate</div><div>stage after judgment by the trial court has been pronounced. It may</div><div>not be totally correct to state that the same considerations would</div><div>14 (2004) 4 SCC 158.</div><div>Criminal Appeal @ SLP (Crl.) No. 2044 of 2022 Page 16 of 20</div><div>apply to both situations as there is a difference in the stages.</div><div>Section 311 of the Cr.P.C. consists of two parts; the first gives</div><div>power to the court to summon any witness at any stage of inquiry,</div><div>trial or other proceedings, whether the person is listed as a witness,</div><div>or is in attendance though not summoned as a witness. Secondly,</div><div>the trial court has the power to recall and re-examine any person</div><div>already examined if his evidence appears to be essential to the just</div><div>decision of the case. On the other hand, the discretion under</div><div>Section 391 of the Cr.P.C. should be read as somewhat more</div><div>restricted in comparison to Section 311 of the Cr.P.C., as the</div><div>appellate court is dealing with an appeal, after the trial court has</div><div>come to the conclusion with regard to the guilt or otherwise of the</div><div>person being prosecuted. The appellate court can examine the</div><div>evidence in depth and in detail, yet it does not possess all the</div><div>powers of the trial court as it deals with cases wherein the decision</div><div>has already been pronounced.</div><div>17. State (NCT of Delhi) v. Shiv Kumar Yadav and Another15</div><div>emphasises that in exercise of the discretion under Section 311 of</div><div>the Cr.P.C., the court, while considering an application for recall of</div><div>witness, should not get swayed by the argument that only the</div><div>15 (2016) 2 SCC 402.</div><div>Criminal Appeal @ SLP (Crl.) No. 2044 of 2022 Page 17 of 20</div><div>accused who is in custody will suffer by the prolongation of</div><div>proceedings, as this may not be valid and serving the ends of</div><div>justice. It is not only the matter of delay but also the hardship to the</div><div>victim/witnesses when they are recalled for examination. Recall is</div><div>certainly permitted if essential for the just decision and for which</div><div>there should be a tangible reason that fair trial would suffer without</div><div>it. The discretion is to be exercised judiciously to prevent failure of</div><div>justice, and must not be exercised arbitrarily. In our opinion, the</div><div>appellate court must be equally, if not more cautious, of the desire</div><div>to delay the hearing of the appeal, or the attempt to lead additional</div><div>evidence to explore a chance of contradictory evidence. While the</div><div>prayer for leading additional evidence should be permitted to</div><div>correct a bona fide error or otherwise, and a party may be entitled</div><div>to further opportunity without any fault on the part of the opposite</div><div>party, the request for recall should be bona fide and is to be</div><div>balanced carefully with relevant considerations, including hardship</div><div>to the witness and delay of the proceedings. Right to speedy trial,</div><div>including speedy disposal of an appeal, is not the exclusive right of</div><div>an accused, but an obligation of the court towards the society in</div><div>general, and the victim in particular. Balance between the rights of</div><div>an accused and the interests and rights of an individual victim and</div><div>the society, without compromising the right of the accused to a fair</div><div>Criminal Appeal @ SLP (Crl.) No. 2044 of 2022 Page 18 of 20</div><div>trial, has been highlighted by this Court in Girish Kumar Suneja v.</div><div>Central Bureau of Investigation16</div><div>, P. Ponnusamy v. State of</div><div>Tamil Nadu17 and State of West Bengal v. Amiya Kumar</div><div>Biswas18</div><div>. Every criminal case, it is stated, is a voyage of discovery</div><div>in which the truth is the quest.19 The process of ascertaining the</div><div>truth requires compliance of procedures and rules of evidence. In a</div><div>well-designed system, judicial findings of formal legal truth should</div><div>coincide with substantive truth. This happens when the facts</div><div>contested are skillfully explored in accordance with the procedure</div><div>prescribed by law. Further, in a criminal trial, burden of proof to</div><div>establish the fact, which has to be proven beyond reasonable</div><div>doubt, is on the prosecution. The power to take additional evidence</div><div>in an appeal is to be exercised to prevent injustice and failure of</div><div>justice, and thus, must be exercised for good and valid reasons</div><div>necessitating the acceptance of the prayer.</div><div>18. When we apply the aforesaid dicta to the factual matrix and</div><div>background of the present case as held in paragraph 11 above, we</div><div>do not think that the test to allow additional evidence is satisfied. On</div><div>the other hand, the criminal appeal, which is ripe for hearing before</div><div>16 (2017) 14 SCC 809.</div><div>17 2022 SCC Online SC 1543.</div><div>18 (2004) 13 SCC 671.</div><div>19 See Ritesh Tewari and Another v. State of Uttar Pradesh and Others, (2010) 10 SCC 677.</div><div>Criminal Appeal @ SLP (Crl.) No. 2044 of 2022 Page 19 of 20</div><div>the High Court, has not been taken up and has been delayed by</div><div>moving the application under Section 391 of the Cr.P.C. for</div><div>recording of additional evidence, which was filed nearly eight years</div><div>after the date of occurrence. If we carefully look at the reasons</div><div>given, which have found favour in the impugned judgment, we can</div><div>easily visualize that there could be further applications for recording</div><div>of additional evidence of the main witnesses, the victim (PW-5)</div><div>and/or the Investigating Officer – Chanchal Mishra (PW-43), who</div><div>have already been subjected to lengthy examinations over a</div><div>prolonged period on eleven occasions in the case of the victim (PW5) as well as the Investigating Officer – Chanchal Mishra (PW-43).</div><div>The attempt is to re-open the entire case and seek re-examination</div><div>of these witnesses at the appellate stage.</div><div>19. The respondent – Asharam @ Ashumal had filed an application20</div><div>for suspension of sentence on the ground of, inter alia, having</div><div>suffered incarceration for nearly 9 years and 7 months. This</div><div>application was rejected by the High Court vide order dated</div><div>07.07.2022 noting that the defence has sought for multiple</div><div>adjournments in the past, two previous applications for suspension</div><div>of sentence have been dismissed and the respondent – Asharam</div><div>20 D.B. Criminal Misc. Third Suspension of Sentence Application (Appeal) No. 220/2022.</div><div>Criminal Appeal @ SLP (Crl.) No. 2044 of 2022 Page 20 of 20</div><div>@ Asharam @ Ashumal continues to be in custody in another trial</div><div>in Gujarat. One of the grounds taken by the appellant in the special</div><div>leave petition bearing Diary No. 33636 of 2022, which challenges</div><div>the High Court order dated 07.07.2022, is that the appeal preferred</div><div>by the respondent – Asharam @ Ashumal cannot be heard till the</div><div>evidence of Ajay Pal Lamba is recorded, as the High Court has</div><div>observed that additional evidence is absolutely necessary for the</div><div>just decision of the appeal.</div><div>20. In view of the aforesaid findings, the appeal is allowed, and the</div><div>impugned judgment is set aside. We request the High Court to take</div><div>up the appeal for an expeditious hearing, as the respondent –</div><div>Asharam @ Ashumal has already suffered incarceration for nearly</div><div>ten years. We also clarify that the observations made in the present</div><div>judgment are for the disposal of the issues raised, and the criminal</div><div>appeal will be decided by the High Court without being influenced</div><div>by any observations and findings recorded herein.</div><div>......................................J.</div><div>(SANJIV KHANNA)</div><div>......................................J.</div><div>(M.M. SUNDRESH)</div><div>NEW DELHI;</div><div>APRIL 17, 2023.</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-22761063106163477142023-04-10T06:32:00.001-07:002023-04-10T06:32:03.229-07:00THE REGISTRAR GENERAL, HIGH COURT OF KARNATAKA & ANR VERSUS SRI M. NARASIMHA PRASAD<div>THE REGISTRAR GENERAL, HIGH COURT OF KARNATAKA & ANR VERSUS SRI M. NARASIMHA PRASAD </div><div><br /></div><div><br /></div>
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<p style="text-align: justify;"><b><a href="https://www.indianconstitution.in/p/landmark-judgments.html">Landmark Cases</a> of India / </b><span style="text-align: left;"><b><a href="https://www.indianconstitution.in/2021/09/100-100-landmark-cases-of-supreme-court.html">सुप्रीम कोर्ट के ऐतिहासिक फैसले</a></b></span></p>
<div><br /></div><div><br /></div><div>1</div><div>REPORTABLE</div><div>IN THE SUPREME COURT OF INDIA</div><div>CIVIL APPELLATE JURISDICTION</div><div>CIVIL APPEAL NOS. OF 2023</div><div>(@ SPECIAL LEAVE PETITION (CIVIL) NOS. 25714-17 OF 2019)</div><div>THE REGISTRAR GENERAL,</div><div>HIGH COURT OF KARNATAKA & ANR. … APPELLANT(S)</div><div>VERSUS</div><div>SRI M. NARASIMHA PRASAD …RESPONDENT(S)</div><div>J U D G M E N T</div><div>V. Ramasubramanian, J.</div><div>Leave granted.</div><div>2. Challenging a common order passed by the Division Bench of</div><div>the High Court of Karnataka, setting aside a penalty of dismissal</div><div>from service imposed upon the respondent herein, who happened</div><div>to be a Civil Judge (Junior Division), the Registrar General of the</div><div>High Court of Karnataka has come up with the above appeals.</div><div>3. We have heard Mr. Basava Prabhu S. Patil, learned senior</div><div>counsel appearing the appellant-High Court and Ms. Anitha</div><div>Shenoy, learned senior counsel appearing for the respondent.</div><div>2</div><div>4. The respondent was appointed as a Civil Judge (Junior</div><div>Division) vide a notification dated 31.01.1995.</div><div>5. On certain allegations of gross misconduct, the respondent</div><div>was placed under suspension by an order dated 25.01.2005,</div><div>followed by the initiation of disciplinary proceedings, with the</div><div>issue of Charge Memos dated 23.03.2005 in DI No.2/2005; DI</div><div>No.3/2005; DI No.4/2005 and DI No.5/2005.</div><div>6. Separate enquiries followed in connection with all the four</div><div>Charge Memos namely DI Nos.2,3,4,5 of 2005, after the</div><div>culmination of which, separate reports were submitted by the</div><div>enquiry officer on 29.03.2007 and 27.04.2007. As per the enquiry</div><div>reports, some charges stood proved and the other charges were not</div><div>proved.</div><div>7. Therefore, second show cause notices were issued and</div><div>thereafter the Full Court of the High Court of Karnataka resolved</div><div>on 04.10.2008 to impose the penalty of dismissal from service</div><div>upon the respondent. Based on the resolution of the Full Court, an</div><div>order of dismissal from service was passed by the Governor of</div><div>Karnataka, vide order dated 19.03.2009.</div><div>3</div><div>8. Challenging the findings of the enquiry officer, the</div><div>respondent filed a set of three writ petitions and challenging the</div><div>order of dismissal from service, the respondent filed a separate</div><div>writ petition. All these writ petitions were dismissed by a learned</div><div>Judge, through a common order dated 30.11.2011.</div><div>9. Aggrieved by the same, the respondent filed intra-court</div><div>appeals. Those appeals were allowed by the Division Bench of the</div><div>High Court by a very strange order, not only setting aside the order</div><div>of penalty and the findings of the enquiry officer but also directing</div><div>that no further inquiry can be held against the respondent. It is</div><div>against such a common order passed in a batch of four intra-court</div><div>appeals that the Registrar General of the High Court has come up</div><div>with these civil appeals.</div><div>10. Before we proceed to consider the correctness of the view</div><div>taken by the High Court, in the light of the rival contentions, it will</div><div>be useful to extract in a tabular column the charges framed</div><div>against the respondent under each of the Charge Memos; his reply</div><div>to each of the charges and the findings of the enquiry officer in</div><div>respect of those charges.</div><div>4</div><div>Charges against the Judicial Officer</div><div>S.</div><div>No.</div><div>Charge Reply to Charge Held to be</div><div>proved/not</div><div>proved by the</div><div>Inquiry Officer</div><div>Inquiry DI.2/2005</div><div>1. That the judicial officer</div><div>had granted an order of</div><div>status quo on an</div><div>interlocutory</div><div>application for</div><div>temporary injunction</div><div>in a civil suit and had</div><div>further granted an exparte order of</div><div>temporary injunction</div><div>in yet another civil.</div><div>suit against the State,</div><div>which was represented</div><div>by the defendants in</div><div>violation of Section</div><div>80(2) of the Code of</div><div>Civil Procedure.</div><div>First suit- Absence of the</div><div>AGP (Mallaraja Gowda) on</div><div>several occasions. Case was</div><div>not adjourned</div><div>unnecessarily. Within two</div><div>months, the interim</div><div>injunction granted was</div><div>vacated.</div><div>Second suit- Case of</div><div>forcible eviction.</div><div>Plaintiff had shown prima</div><div>facie case, therefore order of</div><div>status quo had been</div><div>granted. This was as per</div><div>procedure prescribed under</div><div>Order 39, Rule 3. Open to</div><div>the defendants to file</div><div>application for vacating the</div><div>same, or advance the same</div><div>depending on urgency, no</div><div>such application was filed.</div><div>Proved</div><div>2. That the judicial officer</div><div>had not examined the</div><div>witnesses present in</div><div>court in several cases</div><div>and was merely</div><div>adjourning the same</div><div>even though it was</div><div>possible for him to</div><div>have recorded the</div><div>evidence of those</div><div>witnesses.</div><div>Court was engaged in hearing</div><div>other cases, and engaged in</div><div>Lok Adalat.</div><div>Not proved</div><div>3. That the judicial,</div><div>officer had issued</div><div>bailable and nonbailable warrants to</div><div>witnesses in spite of</div><div>the witnesses in spite</div><div>of the witnesses having</div><div>appeared and seeking</div><div>Court was engaged in hearing</div><div>other/old matters</div><div>Not proved</div><div>5</div><div>to file applications for</div><div>recalling of the</div><div>warrants.</div><div>4. That the judicial officer</div><div>had entertained a</div><div>criminal case and</div><div>issued a non-bailable</div><div>warrant to six</div><div>witnesses and when</div><div>the witnesses not</div><div>appeared, did not</div><div>examine them and</div><div>ordered that the said</div><div>witnesses be bound</div><div>over and insisted that</div><div>they file applications to</div><div>recall the warrants.</div><div>Court was engaged in hearing</div><div>other/old matters.</div><div>Not proved</div><div>5. That the judicial officer</div><div>had granted bail to an</div><div>accused in a case</div><div>involving offences</div><div>under the Karnataka</div><div>Forest Act, 1963.</div><div>Forest offence - exclusively</div><div>triable by magistrate. Not a</div><div>violation of Section 86, 87</div><div>nor was it an ivory case.</div><div>Was under Section, 104(A),</div><div>bail was granted after</div><div>hearing APP who was given</div><div>opportunity to file</div><div>objections. That evidence of</div><div>the APP cannot be relied on</div><div>has he is an interested</div><div>witness, had reported an</div><div>incident of misbehaviour of</div><div>his after which contempt</div><div>proceedings had been</div><div>initiated against him, was</div><div>now trying to falsely</div><div>implicate him.</div><div>Proved</div><div>Inquiry numbered DI.3/2005</div><div>1. The judicial officer</div><div>without preparing the</div><div>text of the judgment</div><div>had pronounced the</div><div>operative portion of</div><div>the judgment in open</div><div>court and that the</div><div>judgment was a</div><div>actually prepared later.</div><div>Denied the charge. Stated that</div><div>he had never pronounced a</div><div>single judgment without</div><div>dictating it in its entirety. He</div><div>had a new stenographer, who</div><div>was not in the habit of</div><div>maintaining the stenographer</div><div>book, frequently made</div><div>mistakes and was irregular in</div><div>taking dictation. The</div><div>stenographer had admitted his</div><div>shortcomings in a letter</div><div>annexed to the reply, had</div><div>resigned from service later.</div><div>Stenographer was a novice,</div><div>Proved</div><div>6</div><div>was negligent and inefficient in</div><div>his work. Text had several</div><div>typographical errors, on</div><div>several occasions needed</div><div>retyping. Inefficiency of</div><div>stenographer, several memos</div><div>issued to him, he had</div><div>tendered apology in writing.</div><div>No complaints from the parties</div><div>in any of the cases, the</div><div>complainant set up by</div><div>Somasekhar and Mallaraja</div><div>Gowda to falsely implicate</div><div>him.</div><div>Allegations pertain to three</div><div>suits- two were money suits</div><div>where no written statement</div><div>was filed and defendants place</div><div>ex-parte.</div><div>Third suit, the judgment had</div><div>been dictated, transcribed and</div><div>pronounced in court. The text</div><div>contained several mistakes</div><div>and stenographer had been</div><div>directed to retype the same.</div><div>Signed judgment was kept in</div><div>an almirah, key was with the</div><div>stenographer, that he had</div><div>deliberately reproduced the</div><div>typed unsigned text instead of</div><div>the signed judgment, was</div><div>aiding the two advocatestrying to falsely implicate him.</div><div>2. That he had</div><div>pronounced the</div><div>judgment in a civil</div><div>suit on 09.10.2002</div><div>whereas the</div><div>judgment was</div><div>actually dictated on</div><div>11.10.2002 which</div><div>remained unsigned</div><div>by the judicial officer.</div><div>Denied the charge. Had</div><div>dictated judgment well in</div><div>advance and signed it.</div><div>Claimed that some mischief</div><div>may have been played by</div><div>vested interests. There was no</div><div>complaint from litigants/ on</div><div>advocates in this matter.</div><div>That the present complainant</div><div>is a fictitious person who is</div><div>not a party in any of the cases</div><div>mentioned, created by</div><div>Advocate Somashekhar and</div><div>the Assistant Public</div><div>Prosecutor to take revenge</div><div>against him.</div><div>Stenographer was also new</div><div>and not accustomed to taking</div><div>Proved</div><div>7</div><div>dictation, had admitted his</div><div>shortcomings.</div><div>3. That the judicial officer</div><div>prepared the judgment</div><div>in O.S.31/2001 but did</div><div>not sign the judgment.</div><div>Denied the charge. That he</div><div>signed all judgments before</div><div>pronouncement. There was</div><div>never any complaint against</div><div>him to this effect. That vested</div><div>interests acting against him.</div><div>His stenographer was new and</div><div>irregular in taking dictation,</div><div>made mistakes, and admitted</div><div>his shortcomings in a letter.</div><div>Proved</div><div>4. That the judicial officer</div><div>prepared the judgment</div><div>in a civil suit on</div><div>5.2.2002 and it</div><div>remained incomplete.</div><div>Denied the charge.</div><div>That vested interests may have</div><div>played mischief by replacing</div><div>the signed full judgment with</div><div>partly printed judgment.</div><div>No complaint from any</div><div>persons.</div><div>Fictitious person who filed the</div><div>complaints.</div><div>Stenographer new and</div><div>unaccustomed to dictation.</div><div>Proved</div><div>5. That the judicial officer</div><div>pronounced the</div><div>judgment in a civil suit</div><div>on 23.10.2002 and a</div><div>portion of the judgment</div><div>was typed on the</div><div>order-sheet and a</div><div>formal judgment was</div><div>prepared only six days</div><div>later.</div><div>Denied the charge.</div><div>That vested interests like</div><div>sheristedar may have played</div><div>mischief by replacing the</div><div>original judgment.</div><div>No complaint from any</div><div>persons.</div><div>Present complainant is a</div><div>fictitious person created by</div><div>Somasekhar, the APP for</div><div>revenge.</div><div>Stenographer new and</div><div>unaccustomed to dictation.</div><div>Proved</div><div>Inquiry numbered DI.4/2005</div><div>1. The judicial officer had,</div><div>in a case involving</div><div>offences punishable</div><div>under the Karnataka</div><div>Forest Act, at the</div><div>instance of the counsel</div><div>for the accused,</div><div>preponed the case and</div><div>granted bail and at the</div><div>request of the</div><div>Additional Public</div><div>Prosecutor, the case</div><div>Somasekhar was the advocate</div><div>appearing for the two accused,</div><div>had a grievance against him.</div><div>Conditional bail had been</div><div>granted, application for</div><div>cancellation of bail was filed,</div><div>and counsel appearing for the</div><div>accused did not refute</div><div>allegations in the application</div><div>on their failure to comply with</div><div>the conditions, Did not file</div><div>objections in writing or raise</div><div>Proved</div><div>8</div><div>was again preponed</div><div>and thereafter an order</div><div>was issued for nonbailable warrant to the</div><div>accused.</div><div>any objections orally.</div><div>Non-bailable warrant issued in</div><div>the interests of justice, acted</div><div>in good faith.</div><div>2. The judicial officer did</div><div>not pass orders in a</div><div>criminal case on the</div><div>application filed u/s</div><div>457 of Cr.P.C. and</div><div>released all the</div><div>properties.</div><div>Counter-claim by complainant</div><div>and accused for release of</div><div>same property, therefore did</div><div>not pass any order, and case</div><div>was to be taken for enquiry or</div><div>for trial</div><div>Not proved</div><div>3. The judicial officer did</div><div>not allow Somashekar,</div><div>Advocate for the</div><div>accused to examine a</div><div>witness in a criminal</div><div>case.</div><div>That the advocate started to</div><div>put irrelevant questions to the</div><div>witness, even though warned</div><div>many times. When he</div><div>persisted, case was adjourned</div><div>Not proved</div><div>4. Application filed by</div><div>Somashekar, Advocate</div><div>who was not called out,</div><div>but to the dismay of</div><div>the advocate, it was</div><div>found that the case</div><div>had been adjourned</div><div>earlier in the day</div><div>without indicating any</div><div>reasons.</div><div>Not proved</div><div>Inquiry numbered DI.5/2005</div><div>1. The judicial officer had</div><div>brought properties for</div><div>sale in public auction</div><div>in criminal cases and</div><div>while having brought</div><div>to auction certain</div><div>articles like choppers,</div><div>sickles, etc. had not</div><div>placed teak-wood</div><div>plants and a motor</div><div>cycle for such auction.</div><div>But however, had</div><div>recorded that the same</div><div>was sold at auction to</div><div>one Linga Raju who</div><div>was related to court</div><div>typist and this</div><div>apparently was done in</div><div>the chambers of the</div><div>judge. While it was also</div><div>alleged that the</div><div>appellant had not</div><div>prepared the estimated</div><div>value of the properties</div><div>Account shreistedar and</div><div>property clerk involved in</div><div>preparing the sale list - all</div><div>ground work done by these</div><div>officers.</div><div>These material witnesses were</div><div>not examined.</div><div>Motor cycle was old, parked in</div><div>the open thus exposed to rain/</div><div>sunlight for more than 6</div><div>months - sold for Rs. 7000/-.</div><div>Sheristedar misplaced auction</div><div>records and thereafter tried to</div><div>falsely implicate him to save</div><div>himself.</div><div>If subordinates had done</div><div>something and he had affixed</div><div>his signature due to oversight,</div><div>should be pardoned for the</div><div>lapses.</div><div>Proved</div><div>9</div><div>before the same were</div><div>sold.</div><div>11. It is seen that among the charges held proved, some related</div><div>to the judicial orders passed by the respondent. Therefore, we are</div><div>prepared straightaway, to ignore those charges and see whether</div><div>the order of penalty of dismissal from service was justified qua the</div><div>other charges and whether the Division Bench of the High Court</div><div>was right in setting aside the same.</div><div>12. Once those charges which revolve around the manner of</div><div>disposal of certain cases are ignored, what remains are certain</div><div>serious charges that revolve around pronouncement of operative</div><div>portion of the judgment in open court without the whole text of the</div><div>judgment being ready. Take for instance, Charge Nos. 1, 2, 4 and 5</div><div>in DI No.3/2005. These Charges are very serious in nature, where</div><div>the respondent is alleged to have pronounced the operative portion</div><div>of the judgment in open court without the whole of the judgment</div><div>being ready. Similarly Charge No.1 in DI No.5/2005 related to the</div><div>conduct of auction sale of properties, seized during the</div><div>investigation. These are very serious in nature and the reply given</div><div>by the respondent to these charges is wishy washy.</div><div>10</div><div>13. A judicial officer cannot pronounce the concluding portion of</div><div>his judgment in open court without the entire text of the judgment</div><div>being prepared/dictated. All that the respondent has done in the</div><div>departmental enquiry is just to pass on the responsibility to the</div><div>inefficient and allegedly novice stenographer. We do not know how</div><div>the findings with regard to such serious charges have been</div><div>completely white-washed by the High Court in the impugned</div><div>judgment.</div><div>14. A look at the impugned judgment of the High Court shows</div><div>that the Division Bench of the High Court was swayed away</div><div>unduly by the animosity attributed by the respondent to a member</div><div>of the local Bar and the Assistant Public Prosecutor. Let us</div><div>assume for a minute that the charges were on the basis of</div><div>complaints initiated by persons bearing ill-will and motive against</div><div>the respondent. Even then, such ill-will and motive may not make</div><div>the conduct of the respondent in not preparing judgments but</div><div>pronouncing the outcome of the case, a condonable conduct.</div><div>15. It is true that some of the charges revolve around judicial</div><div>pronouncements and the judicial decision-making processes and</div><div>that they cannot per se, without anything more, form the</div><div>foundation for departmental proceedings. Therefore, we are</div><div>11</div><div>ignoring those charges. But the charges which revolve around</div><div>gross negligence and callousness on the part of the respondent in</div><div>not preparing/dictating judgments, but providing a fait accompli,</div><div>is completely unacceptable and unbecoming of a judicial officer.</div><div>16. The defence taken by the respondent that the lack of</div><div>experience and the inefficiency on the part of the stenographer has</div><div>to be blamed, for the whole text of the judgment not getting ready</div><div>even after several days of pronouncement of the result in open</div><div>court, was entirely unacceptable. But unfortunately, the High</div><div>Court not only accepted this panchatantra story, but also went to</div><div>the extent of blaming the administration for not examining the</div><div>stenographer as a witness. Such an approach is wholly</div><div>unsustainable. If it was the case of the respondent that the entire</div><div>blame lay upon the stenographer, it was for him to have</div><div>summoned the stenographer as a witness. The High Court</div><div>unfortunately reversed the burden of proof.</div><div>17. While considering a challenge to an order of penalty imposed</div><div>upon a judicial officer pursuant to the disciplinary proceedings</div><div>followed by a resolution of the Full Court of the High Court, the</div><div>Court is obliged only to go by established parameters namely,</div><div>(i) whether the charges stood proved; (ii) whether the findings of</div><div>12</div><div>the inquiry officer are reasonable and probable and not perverse;</div><div>(iii) whether the rules of procedure and the principles of natural</div><div>justice have been followed; and (iv) whether the penalty is</div><div>completely disproportionate, especially in the light of the gravity of</div><div>the misconduct, his past record of service and any other</div><div>extenuating circumstances.</div><div>18. Unfortunately, the High Court did not test the correctness of</div><div>the order of penalty in this case, on the above parameters.</div><div>Instead, the High Court has recorded a finding in Paragraph 26 of</div><div>the impugned order, as though the learned judges had first hand</div><div>information about the problems that the judicial officers faced at</div><div>the lower level. The opinion of the High Court in Paragraph 26 of</div><div>the impugned order that the acts of omission and commission</div><div>attributed to the respondent do not constitute grave misconduct,</div><div>is very-very curious. Adding fuel to fire, the High Court has</div><div>recorded in Paragraph 36 of the impugned order that “dismissing</div><div>him from service itself is very atrocious”. Such a finding is nothing</div><div>but a veiled attack on the Full Court of the High Court. After</div><div>holding so, the High Court has gone to the extent of certifying the</div><div>respondent as an innocent and honest officer. We do not know</div><div>wherefrom the High Court came to such a conclusion.</div><div>13</div><div>19. One more reason articulated in the impugned order of the</div><div>High Court is that the second show cause notice indicated the</div><div>penalty proposed and that therefore, the same was contrary to law.</div><div>In this regard the High Court placed reliance upon the decision of</div><div>this Court in Himachal Pradesh State Electricity Board</div><div>Limited vs. Mahesh Dahiya1</div><div>.</div><div>20. But the decision of this Court in Himachal Pradesh State</div><div>Electricity Board Limited (supra), is one where the disciplinary</div><div>authority-cum-whole time members of the Electricity Board were</div><div>found to have formed an opinion to impose a major penalty even</div><div>before forwarding the copy of the enquiry report to the delinquent.</div><div>But in this case the Full Court of the High Court did not consider</div><div>the enquiry report and did not take a decision in advance to</div><div>impose the penalty of removal from service.</div><div>21. As a matter of fact, the history of evolution of law relating to</div><div>second show cause notice is almost forty years old. The</div><div>requirement of a second show cause notice relating to the</div><div>proposed penalty was removed from Article 311 of the Constitution</div><div>by the Constitution (42nd Amendment) Act, 1976. The same was</div><div>upheld by a Constitution Bench of this Court in Union of India</div><div>1 (2017) 1 SCC 768</div><div>14</div><div>and Anr. vs. Tulsiram Patel2</div><div>. However, a two-member Bench of</div><div>this Court opened a small window in Union of India and Ors. vs.</div><div>E. Bashyan3</div><div>, which led to the decision in Union of India and</div><div>Ors. vs. Mohd. Ramzan Khan4</div><div>, wherein this Court held that the</div><div>opportunity to respond to the findings of the inquiry officer is</div><div>different from the opportunity to respond to the penalty proposed.</div><div>Eventually, the issue got clarified in The Managing Director,</div><div>ECIL, Hyderabad and Ors. vs. B. Karunakar and Ors.5</div><div>.</div><div>22. It is not the case of the respondent that the Full Court of the</div><div>High Court took a decision to impose the penalty of dismissal from</div><div>service even before furnishing the copies of the enquiry reports to</div><div>the respondent. The show cause notices enclosing the enquiry</div><div>reports, are dated 11.10.2007. The representations made by the</div><div>respondent are dated 26.10.2007. It is only thereafter that the</div><div>Administrative Committee No.1 considered the matter on</div><div>28.08.2008 and it was placed before the Full Court on 04.10.2008.</div><div>Therefore, the opinion of the High Court that the second show</div><div>2 (1985) 3 SCC 398</div><div>3 (1988) 2 SCC 196</div><div>4 (1991) 1 SCC 588</div><div>5 (1993) 4 SCC 727</div><div>15</div><div>cause notices were in violation of the principles of natural justice</div><div>is not factually and legally correct.</div><div>23. We have not come across a case where the High Court, while</div><div>setting aside an order of penalty has held that there shall not be</div><div>any further inquiry against the delinquent. But in this case, the</div><div>High Court has done exactly the same, creating a new</div><div>jurisprudence. The relevant portion of the impugned order of the</div><div>High Court reads as follows:-</div><div>“Writ Appeal is allowed. Impugned order passed</div><div>by the learned Single Judge in W.P.Nos.10756/2009 &</div><div>11030-32 of 2009 (S.DIS) dated 30.11.2011 is hereby</div><div>set aside. Punishment order dismissing the appellant</div><div>from service is hereby quashed. All Inquiry reports are</div><div>quashed. There shall not be any further enquiry</div><div>against the appellant. The appellant is to be treated</div><div>as if he had been in service till the date of</div><div>superannuation and pay all consequential monetary</div><div>benefits with interest at 8% p.a. The compliance shall</div><div>be within a period of three months.”</div><div>24. For all the above reasons, the appeals are liable to be</div><div>allowed. Accordingly, they are allowed and the impugned order of</div><div>the Division Bench of the High Court is set aside. The order of</div><div>penalty imposed upon the respondent is upheld and the writ</div><div>petitions filed by the respondent shall stand dismissed. No costs.</div><div>…………………………….. J.</div><div>(V. RAMASUBRAMANIAN)</div><div>16</div><div>..………………………….. J.</div><div>(PANKAJ MITHAL)</div><div>New Delhi;</div><div>April 10, 2023</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-76645222209237200702023-04-10T06:30:00.001-07:002023-04-10T06:30:09.077-07:00Central Bureau of Investigation Versus Vikas Mishra @ Vikash Mishra <div>Central Bureau of Investigation Versus Vikas Mishra @ Vikash Mishra </div><div><br /></div>
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<p style="text-align: justify;"><b><a href="https://www.indianconstitution.in/p/landmark-judgments.html">Landmark Cases</a> of India / </b><span style="text-align: left;"><b><a href="https://www.indianconstitution.in/2021/09/100-100-landmark-cases-of-supreme-court.html">सुप्रीम कोर्ट के ऐतिहासिक फैसले</a></b></span></p>
<div><br /></div><div><br /></div><div>REPORTABLE</div><div>IN THE SUPREME COURT OF INDIA</div><div>CRIMINAL APPELLATE JURISDICTION</div><div>CRIMINAL APPEAL NO. 957 OF 2023</div><div>Central Bureau of Investigation …Appellant</div><div>Versus</div><div>Vikas Mishra @ Vikash Mishra …Respondent</div><div>J U D G M E N T</div><div>M.R. SHAH, J.</div><div>1. Feeling aggrieved and dissatisfied with the</div><div>impugned judgment and order dated 30.09.2022 passed</div><div>by the High Court of Calcutta in Criminal Miscellaneous</div><div>Application No. 1638/2022, by which the Division Bench</div><div>Criminal Appeal No. 957/2023 Page 1 of 14</div><div>of the High Court has directed to release the respondent –</div><div>accused on statutory/default bail under Section 167(2) of</div><div>the Code of Criminal Procedure (Cr.P.C.), the Central</div><div>Bureau of Investigation (CBI) has preferred the present</div><div>appeal.</div><div>2. The facts leading to the present appeal in nutshell</div><div>are as under:</div><div>That on 27.11.2020, an FIR/complaint came to be</div><div>registered by the CBI (ACB, Kolkata) against inter alia the</div><div>officials of Eastern Coalfield Limited, CISF, Railways and</div><div>others for the commission of offences under sections</div><div>120B/409 of the IPC and the relevant provisions of the</div><div>Prevention of Corruption Act. That on 16.04.2021, the</div><div>respondent – accused Vikas Mishra came to be arrested</div><div>by the CBI and was remanded to the CBI custody for a</div><div>period of seven days i.e., till 22.04.2021. However, during</div><div>the said period of remand to CBI custody, the respondent</div><div>– accused Vikas Mishra was admitted in the hospital and</div><div>thus could not be interrogated by the CBI despite police</div><div>custody remand.</div><div>2.1 That on 21.04.2021, the respondent-accused was</div><div>enlarged on interim bail by the learned Special Court</div><div>which came to be extended from time to time. On</div><div>08.12.2021, the learned Special Court cancelled the</div><div>Criminal Appeal No. 957/2023 Page 2 of 14</div><div>interim bail of the respondent-accused on the ground that</div><div>he did not appear before the Special Court despite</div><div>specific directions and also did not cooperate with the CBI</div><div>investigation. That on 09.12.2021 and pursuant to the</div><div>interim bail being cancelled, the respondent-accused</div><div>came to be arrested again on 11.12.2021 and was</div><div>remanded to judicial custody. That again from 12.12.2021</div><div>to 08.04.2022, while in judicial custody, the accused got</div><div>admitted to the hospital and then again from 07.05.2022</div><div>to 08.09.2022.</div><div>2.2 That the accused submitted an application for</div><div>default bail under Section 167(2) Cr.P.C. on the ground of</div><div>non-filing of the charge sheet/report within the prescribed</div><div>period of 90 days. The learned Special Judge rejected</div><div>the said application inter alia on the ground that the</div><div>accused was not remanded to custody under Section</div><div>167(2) Cr.P.C. after cancellation of his bail on the grounds</div><div>that the accused was granted interim bail under the</div><div>provisions of Chapter XXXIII Cr.P.C. and his detention</div><div>pursuant to cancellation of bail was on the strength of</div><div>warrants issued by the Court. That on 19.07.2022, the</div><div>CBI filed a charge sheet against the accused and the</div><div>cognizance was taken by the learned Special Court on the</div><div>same date.</div><div>Criminal Appeal No. 957/2023 Page 3 of 14</div><div>2.3 Against the judgment and order passed by the</div><div>learned Special Judge rejecting the application submitted</div><div>by the accused – Vikas Mishra for statutory/default bail</div><div>under Section 167(2) Cr.P.C., the respondent-accused</div><div>preferred the present application before the High Court.</div><div>By the impugned judgment and order, the High Court has</div><div>allowed the said application and has directed to release</div><div>the respondent on statutory/default bail under Section</div><div>167(2) Cr.P.C. as even within 90 days from the date of rearrest, i.e., from 11.12.2021, the charge sheet was not</div><div>filed and which came to be filed only on 19.07.2022.</div><div>Against the impugned judgment and order passed by the</div><div>High Court directing to release the respondent-accused</div><div>Vikas Mishra on statutory/default bail, the CBI has</div><div>preferred the present appeal.</div><div>3. While issuing notice on 27.02.2023, this Court</div><div>passed the following order:</div><div>“Issue notice to consider the prayer of the</div><div>Investigating Agency to have the custodial</div><div>interrogation of the accused, making it returnable on</div><div>13.03.2023.</div><div>Shri Rajat Sehgal, learned counsel accepts notice</div><div>on behalf of the respondent, who is on caveat.</div><div>To be notified within first ten items.”</div><div>4. Ms. Aishwarya Bhati, learned ASG appearing on</div><div>behalf of the CBI has vehemently submitted that as such</div><div>Criminal Appeal No. 957/2023 Page 4 of 14</div><div>the CBI got the police custody remand for a period of</div><div>seven days on 16.04.2021 till 22.04.2021. It is submitted</div><div>that however the accused got himself first admitted to</div><div>hospital and thereafter got interim bail which came to be</div><div>subsequently cancelled on 08.12.2021, the CBI could not</div><div>exercise the police custody remand which as such was</div><div>allowed by the learned Special Judge on 16.04.2021.</div><div>4.1 It is submitted that as such the order granting seven</div><div>days police custody remand attained finality and therefore</div><div>the CBI should be given the police custody remand of the</div><div>accused for the remainder period of seven days.</div><div>4.2 It is submitted that as such all throughout the</div><div>respondent-accused managed to get himself hospitalised</div><div>on one ground or the other and therefore as such</div><div>successfully frustrated the order of police remand allowed</div><div>by the learned Special Judge. It is submitted that nobody</div><div>can be permitted to frustrate the court’s process.</div><div>4.3 Making above submissions, it is prayed to grant the</div><div>police custody remand of the respondent-accused for the</div><div>remainder period of seven days which the CBI could not</div><div>exercise because of the respondent got himself</div><div>hospitalised and was released on interim bail.</div><div>5. The present application and the prayer of the CBI</div><div>for further police custody remand is vehemently opposed</div><div>Criminal Appeal No. 957/2023 Page 5 of 14</div><div>by Shri Neeraj Kishan Kaul, learned Senior Counsel</div><div>appearing on behalf of the respondent – accused.</div><div>5.1 Relying upon the decisions of this Court in the case</div><div>of Central Bureau of Investigation v. Anupam J.</div><div>Kulkarni, reported in (1992) 3 SCC 141 and the</div><div>subsequent decision in the case of Budh Singh v. State</div><div>of Punjab, reported in (2000) 9 SCC 266, it is</div><div>vehemently submitted by Shri Neeraj Kishan Kaul,</div><div>learned senior counsel appearing on behalf of the</div><div>accused that as such no police custody can be</div><div>granted/allowed beyond the first 15 days from the date of</div><div>arrest. It is submitted that therefore now the police</div><div>custody which shall be beyond the period of 15 days from</div><div>the date of arrest is not permissible.</div><div>5.2 It is further submitted that even otherwise in the</div><div>present case the respondent-accused was hospitalised</div><div>from time to time due to his grave and fragile medical</div><div>condition. That on 18.04.2021, the health of the</div><div>respondent heavily deteriorated due to which he had to be</div><div>admitted in the hospital by the appellant agency itself. It</div><div>is submitted that thereafter on 20.04.2021 he was</div><div>transferred to another hospital – a government hospital for</div><div>better treatment and medical facilities. It is submitted that</div><div>therefore there is no substance in the submission on</div><div>Criminal Appeal No. 957/2023 Page 6 of 14</div><div>behalf of the investigating agency that on 18.04.2021 the</div><div>accused got himself admitted to the hospital to evade his</div><div>custody.</div><div>5.3 It is further submitted that even otherwise between</div><div>08.04.2022 to 18.04.2022 when the respondent was</div><div>remanded to police custody in another case, during that</div><div>time, he was extensively interrogated in the present RC</div><div>as well. It is submitted that even while on interim bail the</div><div>respondent accused was interrogated. It is submitted that</div><div>therefore the prayer on behalf of the CBI made now to</div><div>have the police custody of the respondent-accused may</div><div>not be granted.</div><div>5.4 Shri Neeraj Kishan Kaul, learned senior counsel</div><div>appearing on behalf of the accused has drawn our</div><div>attention to the pendency of the Special Leave</div><div>Petition(Criminal) Nos. 1620-1621/2021 filed by the coaccused in which the investigation by the CBI itself is</div><div>under challenge and this Court passed an interim order</div><div>that no coercive steps be taken against the petitioner of</div><div>that special leave petition.</div><div>5.5 Making above submissions, it is prayed to dismiss</div><div>the present appeal.</div><div>6. We have heard learned counsel for the respective</div><div>parties at length.</div><div>Criminal Appeal No. 957/2023 Page 7 of 14</div><div>While considering the prayer of the CBI for police</div><div>custody for the remainder period of seven days, it is</div><div>required to be noted that as such the learned Special</div><div>Judge granted seven days police custody of the</div><div>respondent-accused on 16.04.2021. The order granting</div><div>seven days police custody as such had attained finality.</div><div>However, it so happened that before the seven days</div><div>police custody is over and before the CBI exercises the</div><div>power of interrogation for full seven days which as per the</div><div>order passed by the learned Special Judge was available</div><div>to the CBI, the respondent-accused got himself</div><div>hospitalised on 18.04.2021. On 21.04.2021, the learned</div><div>Special Judge granted interim bail to the accused. As per</div><div>the settled position of law therefore once on bail/interim</div><div>bail, during that period there cannot be any police</div><div>custody. Therefore, the CBI could not interrogate the</div><div>respondent-accused for full seven days under the police</div><div>custody remand, which otherwise the CBI was entitled to.</div><div>That thereafter, the accused remained in the hospital from</div><div>time to time during the interim bail which also came to be</div><div>extended from time to time. That thereafter, by order</div><div>dated 08.12.2021, the learned Special Judge cancelled</div><div>the interim bail by observing that the respondent accused</div><div>has misused the interim bail and has not cooperated with</div><div>Criminal Appeal No. 957/2023 Page 8 of 14</div><div>the CBI in investigation and that there was no valid reason</div><div>for his hospitalisation. The learned Special Judge also</div><div>observed that in view of the non-cooperation by the</div><div>accused, the interrogation of the accused under judicial</div><div>custody/police custody has necessitated. Some of the</div><div>observations made by the learned Special Judge made in</div><div>the order dated 08.12.2021 cancelling the interim bail are</div><div>relevant, which are as under:</div><div>“Heard both sides, perused the materials in the CD and in</div><div>the case record and considered.</div><div>Following propositions were submitted and seems to be</div><div>admitted that neither the accused person has attempted to tamper</div><div>any evidence nor he is likely to flee from justice. The only aspect on</div><div>which the present prayer under adjudication seems to be banked</div><div>upon is that the accused person willfully halted the progress of the</div><div>investigation by not cooperating the investigating agency during his</div><div>attendances before them. For that I am here to decipher how</div><div>genuine the allegation is and as to whether such alleged noncooperation on the part of this accused person is a sufficient ground</div><div>to curb his bailed freedom and commit him back to custody invoking</div><div>section 437(5) Cr. P.C. I have carefully gone through the transcribed</div><div>conversations on different dates between the 10 and this accused</div><div>person while on bail and the 10. The answers given to questions</div><div>put to him are by no means in the direction of corroborating the</div><div>contents of the documentary evidence collected by the 10 during</div><div>the investigation. The statements of the witnesses recorded u/s 161</div><div>and 164 Cr. P.C. and the documentary evidence like account</div><div>statements etc. collected disclose direct involvement of this</div><div>accused person in transmitting huge sums, to yet unknown or</div><div>unidentifiable entities. This money trail also bears a direct linkage to</div><div>the other FIR named accused persons, whether or not public</div><div>servants, as it transpires from the CD. Any man of common</div><div>prudence would understand that unless these details are elicited</div><div>the investigation would be badly hampered and the total truth will</div><div>never be unearthed. In such circumstances I feel that judicial</div><div>detention and custodial interrogation of the accused person have to</div><div>Criminal Appeal No. 957/2023 Page 9 of 14</div><div>be resorted to. I also am convinced to say that this non-cooperation</div><div>is consciously active and pre-designed and this is sufficient to</div><div>presume willful misuse of liberty of bail on the part of the accused</div><div>person which he obtained exclusively on medical ground. In my</div><div>appreciation allowing furtherance of this liberty would certainly</div><div>defeat the cause of public justice. The nature and seriousness of</div><div>the offence, the character of evidence collected before and after the</div><div>interim bail was granted as against this accused person, the</div><div>present circumstances and shown gesture of designed reluctance</div><div>of the accused person in assisting the investigation to progress, and</div><div>the larger interest of the public and the nation - all at a time, impel</div><div>me to jump to the judicial inference that the accused person should</div><div>no more be allowed to enjoy the liberty of the interim bail granted to</div><div>him on 21.04.2021 and which has been extended from time to time</div><div>till date. The precedents relied upon by the Ld. Advocates for the</div><div>accused person are all dissimilar to the factual matrix of the present</div><div>case and hence require no separate mentioning. So far as the</div><div>present health condition of the accused person is concerned from</div><div>the documents supplied on behalf of the accused person, it is</div><div>definitely evident that his health is in condition than what he was in</div><div>at the time of obtaining the Interim Bail, of course with advice by the</div><div>doctors to keep away from physical and mental stress. But only that</div><div>should not save him from the rigours of incarceration which he was</div><div>supposed to be in, had the illness of that not there at the time of</div><div>getting magnitude been not person the interim bail. There is nothing</div><div>in the medical documents to assume that the accused is not fit</div><div>enough to move, think or talk properly, as was urged by the Ld.</div><div>Advocate for the accused person. In the contrary it is found that the</div><div>accused person is suffering from cirrhosis of liver since before this</div><div>case was initiated and there had been ups and downs in his health</div><div>condition. For that this court cannot let the truth submerge in the</div><div>plea of his chronic ailments.</div><div>Coming to the medical reports submitted today it is found</div><div>that today at 12.10 am he shifted himself to Apollo Hospital where</div><div>he was examined and was readily admitted in some medically</div><div>unspecified ward (Deluxe) under treatment of a specialist</div><div>pulmonologist. Notable that the documents produced show that the</div><div>emergency admission advice form has been struck down by hand</div><div>making it a direct admission advice form and the bed number there</div><div>is also illegible due to repeated overwriting. The admission form</div><div>submitted shows that expected length of stay of the patient at the</div><div>hospital is nil. Even if it is accepted that the accused person is</div><div>Criminal Appeal No. 957/2023 Page 10 of 14</div><div>admitted in hospital for a suspected pulmonary tract infection, that</div><div>does not take away the adverse inferences already drawn by this</div><div>court hereinabove. For the sake of precise investigation coercive</div><div>participation of the accused person by way of judicial detention now</div><div>appears to be imminent and indispensable.”</div><div>7. In light of the aforesaid facts and circumstances and</div><div>the observations made by the learned Special Judge</div><div>while cancelling the interim bail, the decision of this Court</div><div>in the case of Anupam J. Kulkarni (supra) is required to</div><div>be considered.</div><div>7.1 It is true that in the case of Anupam J. Kulkarni</div><div>(supra), this Court observed that there cannot be any</div><div>police custody beyond 15 days from the date of arrest. In</div><div>our opinion, the view taken by this Court in the case of</div><div>Anupam J. Kulkarni (supra) requires re-consideration.</div><div>When we put a very pertinent question to Shri Neeraj</div><div>Kishan Kaul, learned senior counsel appearing on behalf</div><div>of the respondent-accused that in a given case it may</div><div>happen that the learned trial/Special Court refuses to</div><div>grant the police custody erroneously which as such was</div><div>prayed within 15 days and/or immediately on the date of</div><div>arrest and thereafter the order passed by the trial/Special</div><div>Court is challenged by the investigating agency before the</div><div>higher Court, namely, Sessions Court or the High Court</div><div>and the higher Court reverses the decision of the learned</div><div>Magistrate refusing to grant the police custody and by that</div><div>Criminal Appeal No. 957/2023 Page 11 of 14</div><div>time the period of 15 days is over, what would be</div><div>position? The learned senior counsel is not in a position to</div><div>answer the court query.</div><div>8. Be that as it may, the facts in the present case are</div><div>very glaring. Despite the fact that on 16.04.2021, the</div><div>learned Special Judge allowed police custody of the</div><div>respondent-accused for seven days i.e., up to 22.04.2021,</div><div>the respondent-accused got himself admitted in the</div><div>hospital during the period of police custody, i.e., on</div><div>18.04.2021 and obtained interim bail on 21.04.2021 which</div><div>came to be extended till 08.12.2021 when his interim bail</div><div>came to be cancelled by the learned Special Judge by</div><div>observing that the accused has misused the liberty shown</div><div>to him and during the interim bail he has not cooperated</div><div>with the investigating agency. At the cost of repetition, it is</div><div>observed that initial order of grant of seven days police</div><div>custody attained finality. However, due to the aforesaid</div><div>reasons of having got the accused himself hospitalised on</div><div>18.04.2021 and thereafter obtaining the interim bail on</div><div>21.04.2021, the CBI could not interrogate the accused in</div><div>the police custody though having a valid order in its</div><div>favour. Thus, the respondent-accused has successfully</div><div>avoided the full operation of the order of police custody</div><div>granted by the learned Special Judge. No accused can</div><div>Criminal Appeal No. 957/2023 Page 12 of 14</div><div>be permitted to play with the investigation and/or the</div><div>court’s process. No accused can be permitted to frustrate</div><div>the judicial process by his conduct. It cannot be disputed</div><div>that the right of custodial interrogation/investigation is also</div><div>a very important right in favour of the investigating agency</div><div>to unearth the truth, which the accused has purposely and</div><div>successfully tried to frustrate. Therefore, by not permitting</div><div>the CBI to have the police custody interrogation for the</div><div>remainder period of seven days, it will be giving a</div><div>premium to an accused who has been successful in</div><div>frustrating the judicial process.</div><div>9. Now so far as the submission on behalf of the</div><div>accused about the pendency of Special Leave Petition</div><div>(Criminal) Nos. 1620-1621/2021 by the co-accused before</div><div>this Court and the interim order that “no coercive steps be</div><div>taken against the petitioner therein” is concerned, it is</div><div>required to be noted that the pendency of the special</div><div>leave petitions at the behest of the co-accused has</div><div>nothing to do with the present proceedings. It is required</div><div>to be noted that the accused in the present case - Vikas</div><div>Mishra in fact filed a similar special leave petition,</div><div>however, this Court declined to grant the permission to the</div><div>respondent-accused to file the special leave petition by</div><div>Criminal Appeal No. 957/2023 Page 13 of 14</div><div>reserving liberty in his favour to pursue the remedies</div><div>which were available in law.</div><div>10. In view of the above and for the reasons stated</div><div>above, the present appeal succeeds. The appellant-CBI</div><div>is permitted to have the police custody remand of the</div><div>respondent for a period of four days (taking into</div><div>consideration that pursuant to order dated 16.04.2021</div><div>passed by the learned Special Judge the police custody</div><div>remand of seven days of the respondent-accused was</div><div>granted, however for the reasons stated above, the CBI</div><div>could interrogate the respondent-accused only for a</div><div>period of two and half days and therefore could not</div><div>exercise the right of interrogation for the full period of</div><div>seven days of police custody remand).</div><div>11. The instant appeal is accordingly allowed to the</div><div>aforesaid extent.</div><div>……………………………J.</div><div>[M.R. SHAH]</div><div>NEW DELHI; ……………………………J.</div><div>APRIL 10, 2023. [C.T. RAVIKUMAR]</div><div>Criminal Appeal No. 957/2023 Page 14 of 14</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-87858304207084524772023-04-10T06:28:00.005-07:002023-04-10T06:28:39.519-07:00National Capital Territory of Delhi & Ors. Versus Subhash Chander Khatri & Ors. <div>National Capital Territory of Delhi & Ors. Versus Subhash Chander Khatri & Ors. </div><div><br /></div>
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<p style="text-align: justify;"><b><a href="https://www.indianconstitution.in/p/landmark-judgments.html">Landmark Cases</a> of India / </b><span style="text-align: left;"><b><a href="https://www.indianconstitution.in/2021/09/100-100-landmark-cases-of-supreme-court.html">सुप्रीम कोर्ट के ऐतिहासिक फैसले</a></b></span></p>
<div><br /></div><div><br /></div><div>REPORTABLE</div><div>IN THE SUPREME COURT OF INDIA</div><div>CIVIL APPELLATE JURISDICTION</div><div>CIVIL APPEAL NO. 1987 OF 2023</div><div>(@ Special Leave Petition (Civil) No. 6169 of 2023)</div><div>(@ Diary No.37735 of 2022)</div><div>National Capital Territory of </div><div>Delhi & Ors. …Appellant(s)</div><div>Versus</div><div>Subhash Chander Khatri & Ors. …Respondent(s)</div><div> </div><div>J U D G M E N T</div><div>M.R. SHAH, J. </div><div>1. Feeling aggrieved and dissatisfied with the</div><div>impugned judgment and order dated 15.01.2018</div><div>passed by the High Court of Delhi at New Delhi in</div><div>Civil Appeal No.1987 of 2023 Page 1 of 8</div><div>Writ Petition (C) No.12143 of 2015 by which the High</div><div>Court has allowed the said writ petition and has</div><div>declared that the acquisition with respect to the</div><div>subject land is deemed to have lapsed under Section</div><div>24(2) of the Right to Fair Compensation and</div><div>Transparency in Land Acquisition, Rehabilitation</div><div>and Resettlement Act, 2013 (hereinafter referred to</div><div>as “Act, 2013”), however the High Court has</div><div>observed and held that the original writ petitioner</div><div>would be entitled to compensation under the Act,</div><div>2013, the Land and Building Department of the NCT</div><div>of Delhi and others have preferred the present</div><div>appeal.</div><div>2. From the impugned judgment and order passed</div><div>by the High Court, it appears that before the High</div><div>Court it was the specific case on behalf of the</div><div>Department that the possession of the subject land</div><div>has been taken. However, thereafter relying upon</div><div>the decision of this Court in the case of Pune</div><div>Municipal Corporation and Anr. Vs. Harakchand</div><div>Misirimal Solanki and Ors. reported in (2014) 3</div><div>SCC 183 and on the ground that the compensation</div><div>Civil Appeal No.1987 of 2023 Page 2 of 8</div><div>has not been paid, the High Court has allowed the</div><div>writ petition and has declared that the acquisition</div><div>proceedings with respect to the subject land are</div><div>deemed to have lapsed under Section 24(2) of the</div><div>Act, 2013. However, as the land in question was</div><div>already put to use by the beneficiary Department,</div><div>the High Court has directed that the original writ</div><div>petitioner shall be entitled to the compensation</div><div>under the New Act.</div><div>2.1 Thus, even the High Court has accepted that</div><div>the possession of the land in question was already</div><div>taken over and even the land was put to use by the</div><div>Department. Even the original writ petitioner also</div><div>admitted the same and therefore prayed that he be</div><div>paid the compensation under the Act, 2013. Once</div><div>the possession of the subject land was taken over</div><div>and in fact was put to use prior to 2013 Act came</div><div>into force, as per the law laid down by this Court in</div><div>the case of Indore Development Authority Vs.</div><div>Manoharlal and Ors. (2020) 8 SCC 129, there shall</div><div>not be any deemed lapse of acquisition. In</div><div>paragraph 366 it is observed and held as under:</div><div>Civil Appeal No.1987 of 2023 Page 3 of 8</div><div>“366. In view of the aforesaid</div><div>discussion, we answer the questions as</div><div>under:</div><div>366.1. Under the provisions of</div><div>Section 24(1)(a) in case the award is not</div><div>made as on 112014, the date of</div><div>commencement of the 2013 Act, there is no</div><div>lapse of proceedings. Compensation has to</div><div>be determined under the provisions of the</div><div>2013 Act.</div><div>366.2. In case the award has been</div><div>passed within the window period of five</div><div>years excluding the period covered by an</div><div>interim order of the court, then proceedings</div><div>shall continue as provided under Section</div><div>24(1)(b) of the 2013 Act under the 1894 Act</div><div>as if it has not been repealed.</div><div>366.3. The word “or” used in Section</div><div>24(2) between possession and compensation</div><div>has to be read as “nor” or as “and”. The</div><div>deemed lapse of land acquisition</div><div>proceedings under Section 24(2) of the 2013</div><div>Act takes place where due to inaction of</div><div>authorities for five years or more prior to</div><div>commencement of the said Act, the</div><div>possession of land has not been taken nor</div><div>compensation has been paid. In other</div><div>words, in case possession has been taken,</div><div>compensation has not been paid then there</div><div>is no lapse. Similarly, if compensation has</div><div>been paid, possession has not been taken</div><div>then there is no lapse.</div><div>Civil Appeal No.1987 of 2023 Page 4 of 8</div><div>366.4. The expression “paid” in the</div><div>main part of Section 24(2) of the 2013 Act</div><div>does not include a deposit of compensation</div><div>in court. The consequence of nondeposit is</div><div>provided in the proviso to Section 24(2) in</div><div>case it has not been deposited with respect</div><div>to majority of landholdings then all</div><div>beneficiaries (landowners) as on the date of</div><div>notification for land acquisition under</div><div>Section 4 of the 1894 Act shall be entitled to</div><div>compensation in accordance with the</div><div>provisions of the 2013 Act. In case the</div><div>obligation under Section 31 of the Land</div><div>Acquisition Act, 1894 has not been fulfilled,</div><div>interest under Section 34 of the said Act</div><div>can be granted. Nondeposit of</div><div>compensation (in court) does not result in</div><div>the lapse of land acquisition proceedings. In</div><div>case of nondeposit with respect to the</div><div>majority of holdings for five years or more,</div><div>compensation under the 2013 Act has to be</div><div>paid to the “landowners” as on the date of</div><div>notification for land acquisition under</div><div>Section 4 of the 1894 Act.</div><div>366.5. In case a person has been</div><div>tendered the compensation as provided</div><div>under Section 31(1) of the 1894 Act, it is</div><div>not open to him to claim that acquisition</div><div>has lapsed under Section 24(2) due to nonpayment or nondeposit of compensation in</div><div>court. The obligation to pay is complete by</div><div>tendering the amount under Section 31(1).</div><div>The landowners who had refused to accept</div><div>compensation or who sought reference for</div><div>higher compensation, cannot claim that the</div><div>Civil Appeal No.1987 of 2023 Page 5 of 8</div><div>acquisition proceedings had lapsed under</div><div>Section 24(2) of the 2013 Act.</div><div>366.6. The proviso to Section 24(2) of</div><div>the 2013 Act is to be treated as part of</div><div>Section 24(2), not part of Section 24(1)(b).</div><div>366.7. The mode of taking possession</div><div>under the 1894 Act and as contemplated</div><div>under Section 24(2) is by drawing of inquest</div><div>report/memorandum. Once award has been</div><div>passed on taking possession under Section</div><div>16 of the 1894 Act, the land vests in State</div><div>there is no divesting provided under Section</div><div>24(2) of the 2013 Act, as once possession</div><div>has been taken there is no lapse under</div><div>Section 24(2).</div><div>366.8. The provisions of Section 24(2)</div><div>providing for a deemed lapse of proceedings</div><div>are applicable in case authorities have</div><div>failed due to their inaction to take</div><div>possession and pay compensation for five</div><div>years or more before the 2013 Act came into</div><div>force, in a proceeding for land acquisition</div><div>pending with the authority concerned as on</div><div>112014. The period of subsistence of</div><div>interim orders passed by court has to be</div><div>excluded in the computation of five years.</div><div>366.9. Section 24(2) of the 2013 Act</div><div>does not give rise to new cause of action to</div><div>question the legality of concluded</div><div>proceedings of land acquisition. Section 24</div><div>applies to a proceeding pending on the date</div><div>of enforcement of the 2013 Act i.e. 11</div><div>2014. It does not revive stale and timeCivil Appeal No.1987 of 2023 Page 6 of 8</div><div>barred claims and does not reopen</div><div>concluded proceedings nor allow</div><div>landowners to question the legality of mode</div><div>of taking possession to reopen proceedings</div><div>or mode of deposit of compensation in the</div><div>treasury instead of court to invalidate</div><div>acquisition.”</div><div>3. In view of the above and once there shall be no</div><div>deemed lapse of acquisition under Section 24(2) of</div><div>the Act, 2013, the original writ petitioner shall not</div><div>be entitled to the compensation as per the Act,</div><div>2013. Under the circumstances the impugned</div><div>judgment and order passed by the High Court is</div><div>unsustainable. </div><div>5. In view of the above and for the reasons stated</div><div>above, the present appeal succeeds. The impugned</div><div>judgment and order passed by the High Court is</div><div>hereby quashed and set aside. The original writ</div><div>petition filed by the respondent no.1 herein filed</div><div>before the High Court stands dismissed accordingly.</div><div>Civil Appeal No.1987 of 2023 Page 7 of 8</div><div>Present appeal is accordingly allowed. However,</div><div>in the facts and circumstances of the case, there</div><div>shall be no order as to costs. </div><div>Pending applications, if any, also stand</div><div>disposed of. </div><div>………………………………….J.</div><div> [M.R. SHAH]</div><div>………………………………….J.</div><div> [C.T. RAVIKUMAR]</div><div>NEW DELHI; </div><div>APRIL 10, 2023. </div><div>Civil Appeal No.1987 of 2023 Page 8 of 8</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-80362398387394296642023-04-10T06:27:00.001-07:002023-04-10T06:27:04.284-07:00Central Bureau of Investigation Versus Aryan Singh Etc. <div>Central Bureau of Investigation Versus Aryan Singh Etc. </div><div><br /></div>
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<p style="text-align: justify;"><b><a href="https://www.indianconstitution.in/p/landmark-judgments.html">Landmark Cases</a> of India / </b><span style="text-align: left;"><b><a href="https://www.indianconstitution.in/2021/09/100-100-landmark-cases-of-supreme-court.html">सुप्रीम कोर्ट के ऐतिहासिक फैसले</a></b></span></p>
<div><br /></div><div><br /></div><div>REPORTABLE</div><div>IN THE SUPREME COURT OF INDIA</div><div>CRIMINAL APPELLATE JURISDICTION</div><div>CRIMINAL APPEAL NOS. 1025-1026_OF 2023</div><div>(@ SLP (CRL.) NOS. 12794-12795 OF 2022)</div><div>Central Bureau of Investigation …Appellant(s)</div><div>Versus</div><div>Aryan Singh Etc. …Respondent(s)</div><div>J U D G M E N T</div><div>M.R. SHAH, J.</div><div>1. Feeling aggrieved and dissatisfied with the</div><div>impugned common judgment and order passed by the</div><div>High Court of Punjab and Haryana at Chandigarh in</div><div>Criminal Misc. Application Nos. 54107 of 2021 and 8233</div><div>of 2022 by which the High Court, in exercise of the</div><div>powers under Section 482 Cr.P.C., has quashed the</div><div>criminal proceedings of the FIR No. RC0512020S0001</div><div>dated 29.04.2020 registered at Police Station State Grime</div><div>Branch, Chandigarh under Sections 452, 323, 365, 342,</div><div>186, 225, 506 and 120-B IPC (earlier registered as FIR</div><div>Criminal Appeal Nos. 1025-1026 of 2023 Page 1 of 8</div><div>No.195 dated 30.08.2014 under Sections 452, 323, 365,</div><div>342, 225, 186, 506, 120-B IPC at Police Station Phase-1,</div><div>Mohali) as well as all the subsequent proceedings arising</div><div>out of the same, the Central Bureau of Investigation (CBI)</div><div>has preferred the present appeals.</div><div>2. Shri K.M. Nataraj, learned ASG appearing on behalf</div><div>of the CBI has vehemently submitted that pursuant to the</div><div>directions issued by the Hon’ble High Court, investigation</div><div>of the aforesaid was handed over to the CBI, pursuant to</div><div>which the FIR in question was registered on 29.04.2020 at</div><div>Police Station, Crime Branch, Chandigarh for the</div><div>aforesaid offences.</div><div>2.1 It is submitted that initially, the accused Aryan Singh</div><div>was not named in the fresh FIR. However, thereafter,</div><div>after conclusion of the investigation, the chargesheet</div><div>came to be filed against the said Aryan Singh also and he</div><div>has been included as one of the accused.</div><div>2.2 It is submitted that thereafter both the accused</div><div>Aryan Singh and Gautam Cheema filed discharge</div><div>applications before the learned Trial Court, which came to</div><div>be dismissed on merits. It is submitted that thereafter by</div><div>the impugned judgment and order, in exercise of the</div><div>Criminal Appeal Nos. 1025-1026 of 2023 Page 2 of 8</div><div>powers under Section 482 Cr.P.C., the High Court has</div><div>quashed the entire criminal proceedings, as if, the High</div><div>Court was conducting a mini trial.</div><div>2.3 It is vehemently submitted that in the facts and</div><div>circumstances of the case, the High Court has exceeded</div><div>in its jurisdiction while quashing the entire criminal</div><div>proceedings against the accused Aryan Singh and</div><div>Gautam Cheema. It is vehemently submitted that while</div><div>quashing the criminal proceedings, the High Court has</div><div>observed that the allegations / charges against the</div><div>accused have not been proved and that the prosecution is</div><div>malicious. It is submitted that at the stage of deciding the</div><div>quashing petitions against the order passed by the</div><div>learned Trial Court, refusing to discharge the accused, the</div><div>High Court ought not to have considered and/or observed</div><div>that the charges are not proved. It is submitted that the</div><div>charges are required to be proved during the trial and on</div><div>the basis of the evidence led. It is further submitted that</div><div>even the High Court has materially erred in observing that</div><div>the prosecution is malicious. It is submitted that the</div><div>investigation was handed over to the CBI, pursuant to the</div><div>directions issued by the High Court and, thereafter, after</div><div>conclusion of the investigation, the accused came to be</div><div>Criminal Appeal Nos. 1025-1026 of 2023 Page 3 of 8</div><div>chargesheeted and therefore, the initiation of the criminal</div><div>proceedings / proceedings cannot be said to be malicious.</div><div>It is submitted that whether any criminal proceedings is</div><div>malicious, is also required to be considered at the</div><div>conclusion of the trial and not at this stage, namely, at the</div><div>stage of exercise of powers under Section 482 Cr.P.C.</div><div>2.4 Number of submissions have been made on merits</div><div>also by Shri Nataraj, learned ASG, however, for the</div><div>reasons stated hereinabove, we are inclined to set aside</div><div>the impugned common judgment and order passed by the</div><div>High Court by relegating the accused to face the trial and</div><div>thereafter the trial is to proceed against the accused, we</div><div>are not considering the submissions made on behalf of</div><div>the CBI as well as on behalf of the accused on merits.</div><div>3. Present appeals are vehemently opposed by Shri</div><div>R.P. Bhatt, learned senior counsel appearing on behalf of</div><div>the accused Aryan Singh and Shri Mahesh Jethmalani,</div><div>learned senior counsel appearing on behalf of the</div><div>accused Gautam Cheema.</div><div>3.1 Both the learned counsel appearing on behalf of the</div><div>respective accused have made submissions on merits of</div><div>Criminal Appeal Nos. 1025-1026 of 2023 Page 4 of 8</div><div>the allegations made against each accused. However, all</div><div>those submissions are the defences, which are required</div><div>to be considered during the trial. Therefore, we are not</div><div>elaborately dealing with and/or considering the</div><div>submissions made on behalf of the CBI as well as the</div><div>accused on merits on the allegations against the accused</div><div>as any observation of this Court may affect either of the</div><div>parties during the trial.</div><div>4. Having gone through the impugned common</div><div>judgment and order passed by the High Court quashing</div><div>the criminal proceedings and discharging the accused, we</div><div>are of the opinion that the High Court has exceeded in its</div><div>jurisdiction in quashing the entire criminal proceedings in</div><div>exercise of the limited powers under Section 482 Cr.P.C.</div><div>and/or in exercise of the powers under Article 226 of the</div><div>Constitution of India.</div><div>4.1 From the impugned common judgment and order</div><div>passed by the High Court, it appears that the High Court</div><div>has dealt with the proceedings before it, as if, the High</div><div>Court was conducting a mini trial and/or the High Court</div><div>was considering the applications against the judgment</div><div>and order passed by the learned Trial Court on conclusion</div><div>of trial. As per the cardinal principle of law, at the stage of</div><div>Criminal Appeal Nos. 1025-1026 of 2023 Page 5 of 8</div><div>discharge and/or quashing of the criminal proceedings,</div><div>while exercising the powers under Section 482 Cr.P.C.,</div><div>the Court is not required to conduct the mini trial. The</div><div>High Court in the common impugned judgment and order</div><div>has observed that the charges against the accused are</div><div>not proved. This is not the stage where the prosecution /</div><div>investigating agency is/are required to prove the charges.</div><div>The charges are required to be proved during the trial on</div><div>the basis of the evidence led by the prosecution /</div><div>investigating agency. Therefore, the High Court has</div><div>materially erred in going in detail in the allegations and the</div><div>material collected during the course of the investigation</div><div>against the accused, at this stage. At the stage of</div><div>discharge and/or while exercising the powers under</div><div>Section 482 Cr.P.C., the Court has a very limited</div><div>jurisdiction and is required to consider “whether any</div><div>sufficient material is available to proceed further against</div><div>the accused for which the accused is required to be tried</div><div>or not”.</div><div>4.2 One another reason pointed by the High Court is</div><div>that the initiation of the criminal proceedings / proceedings</div><div>is malicious. At this stage, it is required to be noted that</div><div>the investigation was handed over to the CBI pursuant to</div><div>the directions issued by the High Court. That thereafter,</div><div>Criminal Appeal Nos. 1025-1026 of 2023 Page 6 of 8</div><div>on conclusion of the investigation, the accused persons</div><div>have been chargesheeted. Therefore, the High Court has</div><div>erred in observing at this stage that the initiation of the</div><div>criminal proceedings / proceedings is malicious. Whether</div><div>the criminal proceedings was/were malicious or not, is not</div><div>required to be considered at this stage. The same is</div><div>required to be considered at the conclusion of the trial. In</div><div>any case, at this stage, what is required to be considered</div><div>is a prima facie case and the material collected during the</div><div>course of the investigation, which warranted the accused</div><div>to be tried.</div><div>5. In view of the above and for the reasons stated</div><div>above, when the High Court has exceeded in its</div><div>jurisdiction in quashing the entire criminal proceedings</div><div>and applying the law laid down by this Court in catena of</div><div>decisions on exercise of the powers at the stage of</div><div>discharge and/or quashing the criminal proceedings, the</div><div>impugned common judgment and order passed by the</div><div>High Court quashing the criminal proceedings against the</div><div>accused is unsustainable and the same deserves to be</div><div>quashed and set aside.</div><div>5.1 In view of the above and for the reasons stated</div><div>above, present appeals succeed. The impugned common</div><div>Criminal Appeal Nos. 1025-1026 of 2023 Page 7 of 8</div><div>judgment and order passed by the High Court quashing</div><div>and setting aside the criminal proceedings against the</div><div>accused Aryan Singh and Gautam Cheema is/are</div><div>quashed and set aside. The accused to face the trial for</div><div>which they are chargesheeted. However, it is observed</div><div>that all the contentions and defences, which are available</div><div>to the respective parties are kept open, to be considered</div><div>by the learned Trial Court during the trial.</div><div>Considering the fact that the allegations in the FIR</div><div>relates back to the year 2014 and as more than eight</div><div>years have passed, we direct the learned Trial Court to</div><div>conclude the trial at the earliest, but not later than 12</div><div>months from the date of the receipt of the present order.</div><div>CBI to produce the present order before the concerned</div><div>Magistrate at the earliest. All concerned are directed to</div><div>cooperate with the learned Trial Court in concluding the</div><div>trial within the time prescribed mentioned hereinabove.</div><div>Present appeals are allowed accordingly.</div><div>………………………………….J.</div><div> [M.R. SHAH]</div><div>NEW DELHI; ………………………………….J.</div><div>APRIL 10, 2023. [C.T. RAVIKUMAR]</div><div>Criminal Appeal Nos. 1025-1026 of 2023 Page 8 of 8</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-35315380847067269572023-04-10T06:25:00.004-07:002023-04-10T06:25:28.253-07:00Qamar Ghani Usmani Versus The State of Gujarat <div>Qamar Ghani Usmani Versus The State of Gujarat </div><div><br /></div>
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<p style="text-align: justify;"><b><a href="https://www.indianconstitution.in/p/landmark-judgments.html">Landmark Cases</a> of India / </b><span style="text-align: left;"><b><a href="https://www.indianconstitution.in/2021/09/100-100-landmark-cases-of-supreme-court.html">सुप्रीम कोर्ट के ऐतिहासिक फैसले</a></b></span></p>
<div><br /></div><div><br /></div><div>REPORTABLE</div><div>IN THE SUPREME COURT OF INDIA</div><div>CRIMINAL APPELLATE JURISDICTION</div><div>CRIMINAL APPEAL NOS. 10451046/2023</div><div>SLP (CRL) NOS. 011196 011197 / 2022</div><div>Qamar Ghani Usmani ...Appellant(s)</div><div>Versus</div><div>The State of Gujarat …Respondent(s)</div><div>J U D G M E N T</div><div>M.R. SHAH, J.</div><div>1. Leave granted. </div><div>2. Feeling aggrieved and dissatisfied with the</div><div>impugned judgment and order dated</div><div>23.09.2022 passed by the High Court of</div><div>Gujarat at Ahmedabad in Criminal Appeal</div><div>Page 1 of 28</div><div>Nos. 1215/2022 and 1216/2022, by which,</div><div>the Division Bench of the High Court has</div><div>dismissed the said appeals and has refused</div><div>to release the appellant – accused on</div><div>statutory bail (default bail) under Section</div><div>167(2) of the Cr.PC, the original accused has</div><div>preferred the present appeals. </div><div>3. The facts leading to the present appeals in a</div><div>nutshell are as under: </div><div>3.1 That the accused came to be arrested on</div><div>29.01.2022. The 90 days period as provided</div><div>under Section 167 of the Cr.PC, therefore,</div><div>was to expire on 29.04.2022. However, on</div><div>22.04.2022, the Investigating Officer prayed</div><div>for extension of time to complete the</div><div>investigation which came to be granted by</div><div>the learned Trial Court by granting</div><div>extension of 30 days period. The accused</div><div>Page 2 of 28</div><div>came to be informed about the extension on</div><div>23.04.2022 itself. On 22.05.2022, the</div><div>Investigating Officer again prayed for further</div><div>extension which came to be allowed by the</div><div>learned Trial Court on 22.05.2022. At this</div><div>stage, it is required to be noted that on</div><div>22.05.2022, the second extension was</div><div>granted in the presence of the accused. In</div><div>the meantime, the accused submitted the</div><div>default bail application on 10.05.2022 on</div><div>the ground that at the time when the first</div><div>extension was granted on 22.04.2022, the</div><div>same was not in the presence of the accused</div><div>and the accused was not kept present and</div><div>therefore, first extension was bad in law and</div><div>therefore, the accused acquired right to get</div><div>the default bail on 10.05.2022. The learned</div><div>Trial Court rejected the said application(s).</div><div>Page 3 of 28</div><div>The Division Bench of the High Court by the</div><div>impugned judgment and order has</div><div>dismissed the appeals. Hence, the present</div><div>appeals at the instance of the original</div><div>accused. </div><div>4. Shri Mehmood Pracha, learned counsel has</div><div>appeared on behalf of the appellant and Shri</div><div>Tushar Mehta, learned Solicitor General has</div><div>appeared on behalf of the respondent – State</div><div>of Gujarat. </div><div>4.1 Shri Pracha, learned counsel appearing on</div><div>behalf of the accused has vehemently</div><div>submitted that as such the judgment and</div><div>order which has been relied upon by the</div><div>Division Bench of the High Court has been</div><div>subsequently set aside by this Court in the</div><div>case of Jigar alias Jimmy Pravinchandra</div><div>Page 4 of 28</div><div>Adatiya Vs. State of Gujarat 2022 SCC</div><div>OnLine SC 1290. </div><div>4.2 It is further submitted by Shri Pracha,</div><div>learned counsel appearing on behalf of the</div><div>accused that it is admitted by the</div><div>prosecution that the appellant was not</div><div>produced before the learned Trial Court at</div><div>the time of consideration of application for</div><div>first extension of period of investigation. It is</div><div>submitted that in the case of Hitendra</div><div>Vishnu Thakur and Ors. Vs. State of</div><div>Maharashtra and Ors. (1994) 4 SCC 602</div><div>and in the case of Sanjay Dutt Vs. State</div><div>through CBI, Bombay (II) (1994) 5 SCC</div><div>410, notice to the accused at the time of</div><div>consideration of application for extension of</div><div>period of investigation has been held to be</div><div>Page 5 of 28</div><div>mandatory. It is submitted that in the case</div><div>of Sanjay Dutt (supra), this Court has</div><div>further interpreted to mean that a written</div><div>notice is not mandatory but the presence of</div><div>the accused suffices. It is submitted that</div><div>therefore, even as per the law laiddown by</div><div>this Court in the case of Sanjay Dutt</div><div>(supra) at the time of consideration of</div><div>application for extension of period of</div><div>investigation, the presence of the accused is</div><div>must. It is submitted that therefore, in the</div><div>present case when the first extension was</div><div>granted on 22.04.2022 admittedly the</div><div>accused was not produced before the</div><div>learned Trial Court, the first extension</div><div>before itself is illegal and not an extension in</div><div>the eye of law and therefore, thereafter when</div><div>Page 6 of 28</div><div>the accused filed the application(s) under</div><div>Section 167(2) of the Cr.PC for default</div><div>bail/statutory bail, the accused had</div><div>acquired a indefeasible right for release on</div><div>statutory bail as by the time 90 days period</div><div>was over and the first extension is to be</div><div>ignored. </div><div>4.3 It is further submitted by learned counsel</div><div>appearing on behalf of the accused that as</div><div>observed and held by this Court in the case</div><div>of Sayed Mohd. Ahmed Kazmi Vs. State</div><div>(2012) 12 SCC 1 extension of period of</div><div>investigation from retrospective effect, after</div><div>the initial order has been set aside, is not</div><div>permissible. </div><div>4.4 It is further submitted by learned counsel</div><div>appearing on behalf of the accused that</div><div>Page 7 of 28</div><div>recently in the case of Jigar (supra) this</div><div>Court after taking into consideration the</div><div>decisions of this Court in the cases of</div><div>Hitendra Vishnu Thakur (supra) and</div><div>Sanjay Dutt (supra), has specifically</div><div>reiterated the proposition that failure to</div><div>produce the accused at the time of extension</div><div>of period of investigation renders such</div><div>extension bad in law and entitles the</div><div>accused to statutory bail. </div><div>4.5 Making the above submissions and heavily</div><div>relying upon the decisions of this Court in</div><div>the cases of Hitendra Vishnu Thakur</div><div>(supra); Sayed Mohd. Ahmed Kazmi</div><div>(supra); Sanjay Dutt (supra) and Jigar</div><div>(supra), it is prayed to allow the present</div><div>Page 8 of 28</div><div>appeals and direct the respondent to release</div><div>the appellant – accused on statutory bail. </div><div>5. While opposing the present appeals, Shri</div><div>Tushar Mehta, learned Solicitor General</div><div>appearing on behalf of the State has</div><div>vehemently submitted that as such the</div><div>decision of this Court in the case of</div><div>Hitendra Vishnu Thakur (supra) has been</div><div>subsequently watered down by this Court in</div><div>the case of Sanjay Dutt (supra). It is</div><div>submitted that the view taken by this Court</div><div>in the case of Hitendra Vishnu Thakur</div><div>(supra) that at the time of extension of time</div><div>for investigation, a notice to the accused is</div><div>required to be given by the Designated Court</div><div>before it grants any extension is no longer a</div><div>good law in view of the subsequent decision</div><div>Page 9 of 28</div><div>of this Court in the case of Sanjay Dutt</div><div>(supra). It is submitted that in the case of</div><div>Sanjay Dutt (supra) this Court has</div><div>explained the decision in the case of</div><div>Hitendra Vishnu Thakur (supra) and has</div><div>observed and held that the only requirement</div><div>is the production of the accused before the</div><div>Court in accordance with Section 167(1) of</div><div>the Cr.PC and that the accused is not</div><div>entitled to written notice giving reasons for</div><div>the extension. </div><div>5.1 Now so far as the reliance placed upon the</div><div>decision of this Court in the case of Jigar</div><div>(supra) is concerned, it is vehemently</div><div>submitted that as such the said decision</div><div>requires reconsideration by the Larger</div><div>Bench as in the said decision this Court has</div><div>Page 10 of 28</div><div>not taken into consideration Section 465 of</div><div>the Cr.PC. It is submitted that this Court</div><div>has failed to consider the law laiddown by</div><div>this Court in the case of Rambeer Shokeen</div><div>Vs. State (2018) 4 SCC 405, in which it</div><div>was categorically held that the accused</div><div>persons are entitled to the right of the</div><div>default bail only after rejection of the</div><div>application for extension of time period for</div><div>investigation or when the chargesheet is not</div><div>filed within the prescribed time. </div><div>5.2 It is further submitted that even otherwise</div><div>as observed and held by this Court in the</div><div>case of Narender G. Goel Vs. State of</div><div>Maharashtra (2009) 6 SCC 65 the accused</div><div>has no right to be heard at the stage of</div><div>investigation and more particularly, at the</div><div>Page 11 of 28</div><div>stage of extension of period for investigation.</div><div>It is submitted that as observed and held by</div><div>this Court, the accused is not entitled to</div><div>have the reasonings for extension of period</div><div>of investigation because accused has no</div><div>right to be heard at the stage of</div><div>investigation. </div><div>5.3 It is further submitted by Shri Tushar</div><div>Mehta, learned Solicitor General appearing</div><div>on behalf of the State that even otherwise, in</div><div>the facts and circumstances of the case, the</div><div>appellant is not entitled to any relief(s) as</div><div>prayed, more particularly, the statutory bail.</div><div>It is submitted that the first extension was</div><div>granted by the learned Trial Court on</div><div>22.04.2022. The accused was informed</div><div>about extension of time for investigation</div><div>immediately on the very next day i.e.,</div><div>Page 12 of 28</div><div>23.04.2022. It is submitted that nothing</div><div>was done by the accused even on</div><div>29.04.2022 (when the 90 days period was</div><div>over). It is submitted that though the</div><div>accused was informed about the extension</div><div>of time for investigation on 23.04.2022, till</div><div>10.05.2022 he did not challenge the</div><div>extension of time for investigation for a</div><div>further period of 30 days granted on</div><div>22.04.2022. It is submitted that even</div><div>thereafter when the second extension was</div><div>sought and granted on 22.05.2022 on which</div><div>date the accused was present and in whose</div><div>presence the extension was granted, no</div><div>grievance was made by the accused on the</div><div>legality and validity of earlier order dated</div><div>22.04.2022 granting the extension for a</div><div>further period of 30 days. It is submitted</div><div>Page 13 of 28</div><div>that therefore, once the accused failed to</div><div>challenge the first order of extension dated</div><div>22.04.2022 on whatever grounds available</div><div>and allowed the period of extension and</div><div>thereafter at the time when the second</div><div>extension was granted the accused was</div><div>present and he did not make any grievance</div><div>with respect to the first extension granted</div><div>on 22.04.2022, thereafter, it is not open for</div><div>the accused to make any grievance on the</div><div>grant of first extension granted on</div><div>22.04.2022. </div><div>5.4 It is submitted that therefore, at the time</div><div>when the accused preferred application(s)</div><div>for statutory/default bail on 10.05.2022,</div><div>there was already an extension of time for</div><div>investigation by the learned Trial Court vide</div><div>order dated 22.04.2022, which was not</div><div>Page 14 of 28</div><div>challenged by the accused and therefore, the</div><div>application(s) for default/statutory bail</div><div>during the period of extension would not be</div><div>maintainable at all as the said application(s)</div><div>were made during the period of extension for</div><div>investigation. It is submitted by Shri Mehta,</div><div>learned Solicitor General that even in the</div><div>application(s) for default/statutory bail</div><div>preferred on 10.05.2022, the accused did</div><div>not even disclose that the learned Trial</div><div>Court had granted the extension for</div><div>investigation vide order dated 22.04.2022</div><div>which as such was communicated to the</div><div>accused on 23.04.2022. It is submitted that</div><div>therefore, in view of the above facts, none of</div><div>the decisions of this Court relied upon on</div><div>behalf of the accused shall be applicable to</div><div>the facts of the case on hand. It is submitted</div><div>Page 15 of 28</div><div>that so far as the reliance placed upon the</div><div>decision of this Court in the case of Sayed</div><div>Mohd. Ahmed Kazmi (supra) is concerned,</div><div>it is submitted by learned Solicitor General</div><div>that on facts the said decision shall not be</div><div>applicable to the facts of the case on hand.</div><div>It is submitted that in the case before this</div><div>Court, in fact the extension was challenged</div><div>before the Sessions Court and the extension</div><div>was held to be bad in law. </div><div>5.5 Making the above submissions, it is prayed</div><div>to dismiss the present appeals.</div><div>6. We have heard Shri Mehmood Pracha,</div><div>learned counsel appearing on behalf of the</div><div>accused – appellant and Shri Tushar Mehta,</div><div>learned Solicitor General appearing on</div><div>behalf of the State of Gujarat.</div><div>Page 16 of 28</div><div>6.1 The short question which is posed for the</div><div>consideration of this Court is whether in the</div><div>facts and circumstances of the case, the</div><div>appellant shall be entitled to the</div><div>statutory/default bail under Section 167(2)</div><div>of the Cr.PC on the ground that at the time</div><div>when the extension of time for completing</div><div>the investigation was prayed by the</div><div>investigating agency and granted by the</div><div>Trial Court the accused was not kept</div><div>present?</div><div>6.2 Learned counsel appearing on behalf of the</div><div>appellant – accused has heavily relied upon</div><div>the decisions of this Court in the cases of</div><div>Hitendra Vishnu Thakur (supra); Sanjay</div><div>Dutt (supra); Sayed Mohd. Ahmed Kazmi</div><div>Page 17 of 28</div><div>(supra) and on the recent decision of this</div><div>Court in the case of Jigar (supra). </div><div>6.2.1 In the case of Hitendra Vishnu Thakur</div><div>(supra), this Court observed and held that</div><div>when a report is submitted by the Public</div><div>Prosecutor to the Designated Court for grant</div><div>of extension, its notice should be issued to</div><div>the accused before granting such an</div><div>extension so that the accused may have an</div><div>opportunity to oppose the extension on all</div><div>legitimate and legal grounds available to</div><div>him. </div><div>6.2.2 However, thereafter, the decision of this</div><div>Court in the case of Hitendra Vishnu</div><div>Thakur (supra) fell for consideration before</div><div>this Court in the case of Sanjay Dutt</div><div>Page 18 of 28</div><div>(supra) and the view taken by this Court in</div><div>the case of Hitendra Vishnu Thakur</div><div>(supra) as above, has not been accepted by</div><div>the Constitution Bench of this Court and it</div><div>is observed and held in the case of Sanjay</div><div>Dutt (supra) that a notice to the accused is</div><div>not required to be given by the Designated</div><div>Court before it grants any extension for</div><div>completing the investigation. Meaning</div><div>thereby, the accused is to be kept present</div><div>before the Court when it grants any</div><div>extension for completing the investigation.</div><div>The view taken by this Court in the case of</div><div>Hitendra Vishnu Thakur (supra) that a</div><div>notice is to be given to the accused so that</div><div>he can oppose the extension has not been</div><div>accepted by the Constitution Bench of this</div><div>Page 19 of 28</div><div>Court in the case of Sanjay Dutt (supra). As</div><div>such under the Scheme of Cr.PC and on the</div><div>report submitted by the Investigating</div><div>Agency, prayer for extension of time for</div><div>completing investigation is subject to the</div><div>satisfaction of the concerned Court whether</div><div>to grant further extension or not. The Court</div><div>is to be satisfied on the grounds on which</div><div>the extension is sought. </div><div>6.2.3 Now so far as the reliance placed upon the</div><div>decision of this Court in the case of Sayed</div><div>Mohd. Ahmed Kazmi (supra) by learned</div><div>counsel appearing on behalf of the appellant</div><div>is concerned, at the outset, it is required to</div><div>be noted that the said decision shall not be</div><div>applicable to the facts of the case on hand.</div><div>In the case before this Court, in fact, the</div><div>Page 20 of 28</div><div>extension granted by the learned Chief</div><div>Metropolitan Magistrate was challenged on</div><div>the ground that the learned Chief</div><div>Metropolitan Magistrate had no competence</div><div>to extend the judicial custody of the</div><div>accused. The learned Additional Sessions</div><div>Judge accepted the same. However,</div><div>thereafter, a fresh extension was sought</div><div>which was beyond the period prescribed</div><div>under Section 167 of the Cr.PC and</div><div>therefore, this Court observed and held that</div><div>extension for period of investigation from</div><div>retrospective effect shall not be permissible. </div><div>6.3 Similarly, even the decision of this Court in</div><div>the case of Rambeer Shokeen (supra) relied</div><div>upon by learned Solicitor General shall also</div><div>not be applicable to the facts of the case on</div><div>Page 21 of 28</div><div>hand. In the case of Rambeer Shokeen</div><div>(supra) pending application by the</div><div>Investigating Agency for extension of time</div><div>for completing the investigation, the accused</div><div>made an application for statutory/default</div><div>bail and to that this Court observed and</div><div>held that the application filed by the</div><div>Investigating Agency for extension of time</div><div>for completing the investigation which was</div><div>prayed in time kept pending ought to be</div><div>decided first by the Court. </div><div>6.4 Thus, sum and substance of law laiddown</div><div>by this Court in the cases of Sanjay Dutt</div><div>(supra) and Jigar (supra) are that while</div><div>considering the application by the</div><div>Investigating Agency for extension of time</div><div>for completing the investigation beyond the</div><div>Page 22 of 28</div><div>period prescribed under Section 167(2) of</div><div>the Cr.PC the accused is to be given notice</div><div>and/or is to be kept present before the</div><div>Court, so that, the accused had knowledge</div><div>that the extension is sought and granted. </div><div>6.5 However, in the facts and circumstances of</div><div>the case, we are of the view that the</div><div>appellant is not entitled to the relief of</div><div>statutory/default bail. In the present case</div><div>the facts are glaring which are as under: </div><div>……The accused was arrested on</div><div>29.01.2022. The 90 days provided</div><div>under Section 167 Cr.PC thus</div><div>would expire on 29.04.2022.</div><div>Within the period of 90 days i.e.,</div><div>on 22.04.2022, the IO submitted</div><div>the report and prayed for extension</div><div>of time for completing the</div><div>Page 23 of 28</div><div>investigation which came to be</div><div>allowed by the learned Trial Court</div><div>by granting extension of 30 days</div><div>period. It is true that for whatever</div><div>reason, the accused was not kept</div><div>present at the time when the</div><div>learned Trial Court considered the</div><div>report submitted by the IO for</div><div>extension of time for completing</div><div>the investigation. However, the</div><div>accused came to be informed</div><div>about the extension on the very</div><div>next day i.e., 23.04.2022. The</div><div>accused did not challenge the</div><div>extension on any ground which</div><div>may be available to him and/or did</div><div>not make any grievance that such</div><div>an extension is illegal and/or</div><div>Page 24 of 28</div><div>contrary to law. On 10.05.2022, he</div><div>made the present application for</div><div>default bail/statutory bail on the</div><div>ground that the chargesheet has</div><div>not been filed within the period of</div><div>90 days. At this stage, it is</div><div>required to be noted that at the</div><div>time when the present application</div><div>for default/statutory bail was</div><div>made on 10.05.2022, there was</div><div>already an extension of time by the</div><div>learned Trial Court which as such</div><div>was in existence and the extension</div><div>was up to 22.05.2022. At this</div><div>stage, it is required to be noted</div><div>that though informed on</div><div>23.04.2022 about the extension of</div><div>time for completing the</div><div>Page 25 of 28</div><div>investigation, the accused did not</div><div>disclose the same in the</div><div>application for default</div><div>bail/statutory bail submitted on</div><div>10.05.2022. That thereafter, on</div><div>22.05.2022, IO again submitted</div><div>the report for further extension of</div><div>time for completing the</div><div>investigation which came to be</div><div>allowed/granted by the learned</div><div>Trial Court which as such was in</div><div>the presence of the accused and at</div><div>that time, the accused remained</div><div>present. Neither the first extension</div><div>nor the second extension came to</div><div>be challenged by the accused.”</div><div>7. Therefore, in the aforesaid peculiar facts and</div><div>circumstances of the case, when two</div><div>Page 26 of 28</div><div>extensions granted by the Court which are</div><div>not challenged and at the time when the</div><div>default bail application was made on</div><div>10.05.2022 there was already an extension</div><div>and even thereafter, also there was a second</div><div>extension which was in presence of the</div><div>accused and thereafter, when the</div><div>chargesheet has been filed within the period</div><div>of extension, the accused is not entitled to</div><div>be released on statutory/default bail as</div><div>prayed. Therefore, in the facts and</div><div>circumstances of the case, we are in</div><div>agreement with the ultimate conclusion</div><div>reached by the High Court denying the</div><div>statutory/default bail to the accused. </div><div>8. In view of the above and for the reasons</div><div>stated above and, in the facts, and</div><div>circumstances of the case narrated</div><div>Page 27 of 28</div><div>hereinabove, the appellant is not entitled to</div><div>the benefit of statutory/default bail. Under</div><div>the circumstances, the present appeals</div><div>deserve to be dismissed and are accordingly</div><div>dismissed. However, it will be open for the</div><div>accused to prayer for regular bail which may</div><div>be considered in accordance with law and</div><div>on its own merits. Present appeals stand</div><div>dismissed accordingly. </div><div>………………………………….J.</div><div>[M.R. SHAH]</div><div>………………………………….J.</div><div>[C.T. RAVIKUMAR]</div><div>NEW DELHI;</div><div>APRIL 10, 2023</div><div>Page 28 of 28</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-46957232283678280372023-04-10T06:23:00.004-07:002023-04-10T06:23:34.860-07:00R. HEMALATHA VERSUS KASHTHURI <div>R. HEMALATHA VERSUS KASHTHURI </div><div><br /></div>
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<p style="text-align: justify;"><b><a href="https://www.indianconstitution.in/p/landmark-judgments.html">Landmark Cases</a> of India / </b><span style="text-align: left;"><b><a href="https://www.indianconstitution.in/2021/09/100-100-landmark-cases-of-supreme-court.html">सुप्रीम कोर्ट के ऐतिहासिक फैसले</a></b></span></p>
<div><br /></div><div><br /></div><div>REPORTABLE</div><div>IN THE SUPREME COURT OF INDIA</div><div>CIVIL APPELLATE JURISDICTION</div><div>CIVIL APPEAL NO. 2535/2023</div><div>(@SLP (C) No. 14884/2022)</div><div>R. HEMALATHA ...APPELLANT(S)</div><div> </div><div>VERSUS</div><div>KASHTHURI …RESPONDENT(S)</div><div>J U D G M E N T</div><div>M. R. Shah, J.</div><div>1. Leave granted. </div><div>2. Feeling aggrieved and dissatisfied with the</div><div>impugned judgment and order passed by the</div><div>High Court of Judicature at Madras at</div><div>Madurai passed in Revision Application</div><div>Page 1 of 26</div><div>No.1877 of 2017 dated 01.02.2022 by which</div><div>the High Court has allowed the said revision</div><div>application preferred by the respondent herein</div><div>by quashing and setting aside the order passed</div><div>by the learned Trial Court passed in I.A.</div><div>No.159 of 2017 in O.S. No.199 of 2014 by</div><div>further directing that the document in</div><div>question shall be received in evidence in the</div><div>suit for specific performance, the original</div><div>defendant has preferred the present appeal. </div><div>3. The facts leading to the present appeal in nutshell are as under:</div><div>2.1 That the respondent herein is an original</div><div>plaintiff (hereinafter referred to as “original</div><div>plaintiff”) instituted civil suit being O.S. No.199</div><div>of 2014 for specific performance of the</div><div>Agreement to Sell dated 10.09.2013. After the</div><div>Page 2 of 26</div><div>chiefexamination of the plaintiff as PW1, on</div><div>the application filed by the appellant – original</div><div>defendant, a preliminary issue was framed by</div><div>the learned Trial Court on the admissibility of</div><div>the Agreement dated 10.09.2013 in evidence. It</div><div>was the case on behalf of the defendant that in</div><div>view of the Tamil Nadu Amendment Act No.29</div><div>of 2012 to the Indian Registration Act, under</div><div>which the instruments of agreement relating to</div><div>sale of immovable property of the value of</div><div>Rs.100/ and upwards is compulsorily</div><div>required to be registered, the said unregistered</div><div>document shall be inadmissible in evidence.</div><div>On the other hand, relying upon Section 49(a)</div><div>and (c) of the Act, it was submitted that an</div><div>unregistered Agreement to Sell can be admitted</div><div>as evidence of a contract in a suit for specific</div><div>performance. The learned Trial Court held the</div><div>Page 3 of 26</div><div>preliminary issue in favour of the defendant</div><div>and against the plaintiff by observing that the</div><div>unregistered Agreement dated 10.09.2013</div><div>shall not be admissible in evidence.</div><div>2.2 Feeling aggrieved and dissatisfied with the</div><div>order of the learned Trial Court, the plaintiff</div><div>preferred the present revision application</div><div>before the High Court. By the impugned</div><div>judgment and order, the High Court has</div><div>allowed the revision petition relying upon</div><div>Section 49 of the Registration Act by setting</div><div>aside the order passed by the learned Trial</div><div>Court and directed that the agreement in</div><div>question be received in evidence considering</div><div>the fact that the suit in question is a suit for</div><div>specific performance, which falls within the</div><div>Page 4 of 26</div><div>first exception carved out in the proviso to</div><div>Section 49.</div><div>2.3 The impugned judgment and order passed by</div><div>the High Court directing to receive the</div><div>unregistered Agreement to Sell in evidence in</div><div>a suit for specific performance, the original</div><div>defendant has preferred the present appeal.</div><div>3. Learned counsel appearing on behalf of the</div><div>appellant herein – original defendant has</div><div>vehemently submitted that in the facts and</div><div>circumstances of the case, the High Court has</div><div>materially erred in directing to receive the</div><div>unregistered agreement in evidence.</div><div>3.1 It is submitted that it is an admitted position</div><div>that the Agreement to Sell dated 10.09.2013</div><div>which is the foundation or basis of the suit is</div><div>an unregistered Agreement to Sell and</div><div>Page 5 of 26</div><div>therefore cannot be exhibited in evidence for</div><div>the main purpose in the suit, in view of the</div><div>Tamil Nadu Amendment to Section 17 of the</div><div>Registration Act making an Agreement to Sell</div><div>to be compulsorily registered with effect from</div><div>01.12.2012.</div><div>3.2 It is submitted that the “explanation” attached</div><div>to subclause (2) of Section 17 which also</div><div>relates to Agreement to Sell has been omitted.</div><div>It is submitted that said explanation was</div><div>inserted by Amendment Act, 1927, to</div><div>overcome the judgment of the Privy Council in</div><div>the case of Dayal Singh vs. Indar Singh,</div><div>(1926) 24 LW 396. It is submitted that in that</div><div>case, an advance paid under an Agreement to</div><div>Sell being a charge on the property as per</div><div>Section 55(6)(v) of the Transfer of Property Act</div><div>Page 6 of 26</div><div>was held to create an interest and hence,</div><div>unregistered Agreement to Sell cannot be</div><div>admitted in evidence. The explanation</div><div>remedied the situation and save the</div><div>Agreement to Sell from the requirement of</div><div>compulsory registration.</div><div>3.3 It is submitted that Section 54 of the Transfer</div><div>of Property Act states that an Agreement to</div><div>Sell by itself does not create any interest in or</div><div>charge on the property. As per Section 17(2)(v)</div><div>of the Registration Act with reference to</div><div>Section 1(b) and (c), that an</div><div>agreement/document simplicitor merely</div><div>creating a right to obtain another document,</div><div>was saved from compulsory registration. It is</div><div>submitted that thus prior to the amendment</div><div>of 2012 and after the amendment, an</div><div>Page 7 of 26</div><div>Agreement to Sell simplicitor or reciting</div><div>payment of earnest money was not required to</div><div>be registered. For these savings, an Agreement</div><div>to Sell would also have required registration,</div><div>as it is a document affecting immovable</div><div>property. It is submitted that now after the</div><div>2012 amendment, an Agreement to Sell for</div><div>Rs.100/ or upwards is to be compulsorily</div><div>registered. An agreement recital for payment of</div><div>advance is also to be compulsorily registered</div><div>as the “explanation” in Section 17(2)</div><div>introduced by 1927 amendment after Dayal</div><div>Singh’s case, has been omitted by the present</div><div>amendment. The advance amount and sale</div><div>consideration are part and parcel of the</div><div>transactions between the parties.</div><div>Page 8 of 26</div><div>3.4 It is submitted that as per Section 49(a) and</div><div>(c) of the Registration Act, a document</div><div>requires to be registered, if not registered shall</div><div>not affect the immovable property comprised</div><div>therein and shall not be received as evidence</div><div>of any transaction affecting such property. It</div><div>is submitted that prior to 2012 amendment,</div><div>when an Agreement to Sell was not required to</div><div>be registered, Section 49(a) and (c) had no</div><div>operation in relation to an Agreement to Sell.</div><div>So an unregistered Agreement to Sell had no</div><div>restriction in being received as evidence of any</div><div>transaction affecting such immovable property</div><div>or affecting immovable property as such.</div><div>Thus, the terms of the document and the</div><div>transaction embodied in it could be relied on</div><div>in its entirety in any proceeding in the preamendment era. It is submitted that however</div><div>Page 9 of 26</div><div>now after the amendment, Section 49(a) and</div><div>(c) of the Registration Act which are both</div><div>substantive law and rule of evidence, apply to</div><div>an unregistered Agreement to Sell and it shall</div><div>not affect immovable property and shall not be</div><div>received as evidence of transaction affecting</div><div>immovable property.</div><div>3.5 It is further submitted by the learned counsel</div><div>for the defendant that if the interpretation of</div><div>the Hon’ble High Court given in the impugned</div><div>order is followed, then the same would render</div><div>the Amendment Act, 2012 otiose and</div><div>meaningless, simply because the situation</div><div>before the said amendment was exactly as has</div><div>been laid down in the impugned order. The</div><div>legislative intent behind making an Agreement</div><div>to Sell, a compulsorily registrable document</div><div>Page 10 of 26</div><div>has been completely ignored by the Hon’ble</div><div>High Court.</div><div>3.6 It is submitted that after introduction of a</div><div>specific provision relating to Agreement to Sell</div><div>in Section 17(1)(g) of the Act, and in the</div><div>absence of any amendment in Section 17(2) to</div><div>include clause (g) also within its fold, Section</div><div>17(2)(v) will only operate in relation to</div><div>documents covered under the general</div><div>provision of Clauses (b) and (c) of subsection</div><div>(1). it is submitted that in that sense Section</div><div>17(2)(v) will apply to all other agreements to</div><div>mortgage, to lease, to release, to exchange etc.</div><div>but will not apply to an Agreement to Sell.</div><div>3.7 Making above submissions, it is prayed to</div><div>allow the present appeal and quash and set</div><div>aside the impugned order passed by the</div><div>Page 11 of 26</div><div>Hon’ble High Court and to restore the order</div><div>passed by the learned Trial Court.</div><div>4. While opposing the present appeal, learned</div><div>counsel appearing on behalf of original</div><div>plaintiff has heavily relied upon the proviso to</div><div>Section 49 of the Registration Act which</div><div>specifically provides that an unregistered</div><div>document affecting the immovable property</div><div>and required by the Registration Act to be</div><div>registered may be received as evidence of a</div><div>contract in a suit for specific performance</div><div>under ChapterII of the Specific Relief Act or</div><div>as evidence of any collateral transaction not</div><div>required to be affected by registered</div><div>instrument.</div><div>4.1 It is submitted that as rightly observed and</div><div>held by the Hon’ble High Court though Section</div><div>Page 12 of 26</div><div>17(1) of the Registration Act has been</div><div>amended by the Tamil Nadu Act, 2012 by</div><div>inserting Section 17(1)(g), making the</div><div>Agreement to Sell/ Agreement affecting any</div><div>immovable property compulsorily required to</div><div>be registered, there is no corresponding</div><div>amendment to Section 49 more particularly</div><div>proviso to Section 49 of the Registration Act.</div><div>4.2 It is further submitted that even the object</div><div>and purpose of Tamil Nadu Amendment Act,</div><div>2012 more particularly inserting Section 17(1)</div><div>(g) is required to be considered which has</div><div>been elaborately dealt with and considered by</div><div>the Hon’ble High Court in the impugned</div><div>judgment and order. It is submitted that a</div><div>perusal of statement of objects and reasons to</div><div>the Act No.29 of 2012 would suggest that</div><div>Page 13 of 26</div><div>primarily the amendment has been introduced</div><div>by the State of Tamil Nadu by reason of the</div><div>fact that instruments of agreement relating to</div><div>sale of immovable property, instruments of</div><div>power of attorney relating to immovable</div><div>property and instruments evidencing</div><div>agreement of deposit of title deeds, which were</div><div>not registrable were resulting in loss to the</div><div>exchequer as the public were executing these</div><div>documents on white paper or on stamp paper</div><div>of nominal value.</div><div>4.3 With the above submissions and heavily</div><div>relying upon the proviso to Section 49 of the</div><div>Registration Act, it is prayed to dismiss the</div><div>present appeal.</div><div>5. We have heard the learned counsel appearing</div><div>on behalf of respective parties at length. The</div><div>Page 14 of 26</div><div>short question posed for the consideration of</div><div>this Court is effect of Section 17(1)(g) of the</div><div>Registration Act applicable to the State of</div><div>Tamil Nadu by which Section 17(1)(g) of the</div><div>Registration Act has been inserted and</div><div>instruments of agreement relating to sale of</div><div>immovable property of the value of Rs.100/</div><div>and upwards is made compulsorily registrable</div><div>and whether such unregistered agreement</div><div>relating to sale of immovable property can be</div><div>received in evidence in a suit for specific</div><div>performance?</div><div>6. While answering the aforesaid issues and</div><div>appreciating the submissions made by learned</div><div>counsel appearing on behalf of the respective</div><div>parties, Section 17 of the Registration Act,</div><div>1908, as applicable prior to the Registration</div><div>Page 15 of 26</div><div>(Tamil Nadu Amendment) Act, 2012 and</div><div>Section 17 post Amendment Act, 2012, are</div><div>required to be referred to which are as under.</div><div>7. Section 17 of the Registration Act, 1908, post</div><div>Tamil Nadu Amendment Act, 2012 reads as</div><div>under :</div><div>“17. Documents of which registration is</div><div>compulsory.—(1) The following documents shall be</div><div>registered, if the property to which they relate is</div><div>situate in a district in which, and if they have been</div><div>executed on or after the date on which, Act No. XVI</div><div>of 1864, or the Indian Registration Act, 1866, or the</div><div>Indian Registration Act, 1871, or the Indian</div><div>Registration Act, 1877, or this Act came or comes</div><div>into force, namely:—</div><div>(a) instruments of gift of immovable property; </div><div>(b) other nontestamentary instruments which</div><div>purport or operate to create, declare, assign, limit or</div><div>extinguish, whether in present or in future, any</div><div>right, title or interest, whether vested or contingent,</div><div>of the value of one hundred rupees and upwards,</div><div>to or in immovable property; </div><div>(c) nontestamentary instruments which</div><div>acknowledge the receipt or payment of any</div><div>consideration on account of the creation,</div><div>Page 16 of 26</div><div>declaration, assignment, limitation or extinction of</div><div>any such right, title or interest; and</div><div>(d) leases of immovable property from year to year,</div><div>or for any term exceeding one year, or reserving a</div><div>yearly rent;</div><div>[(e) nontestamentary instruments transferring or</div><div>assigning any decree or order of a Court or any</div><div>award when such decree or order or award</div><div>purports or operates to create, declare, assign, limit</div><div>or extinguish, whether in present or in future, any</div><div>right, title or interest, whether vested or contingent,</div><div>of the value of one hundred rupees and upwards,</div><div>to or in immovable property:] </div><div>Provided that the [State Government] may, by order</div><div>published in the [Official Gazette], exempt from the</div><div>operation of this subsection any lease executed in</div><div>any district, or part of a district, the terms granted</div><div>by which do not exceed five years and the annual</div><div>rents reserved by which do not exceed fifty rupees. </div><div>[(1A) The documents containing contracts to transfer</div><div>for consideration, any immovable property for the</div><div>purpose of section 53A of the Transfer of Property</div><div>Act, 1882 (4 of 1882) shall be registered if they</div><div>have been executed on or after the commencement</div><div>of the Registration and Other Related laws</div><div>(Amendment) Act, 2001 (48 of 2001) and if such</div><div>documents are not registered on or after such</div><div>commencement, then, they shall have no effect for</div><div>the purposes of the said section 53A.] </div><div>(2) Nothing in clauses (b) and (c) of subsection (1)</div><div>applies to—</div><div>(i) any composition deed; or</div><div>Page 17 of 26</div><div>(ii) any instrument relating to shares in a joint stock</div><div>Company, notwithstanding that the assets of such</div><div>Company consist in whole or in part of immovable</div><div>property; or</div><div>(iii) any debenture issued by any such Company</div><div>and not creating, declaring, assigning, limiting or</div><div>extinguishing any right, title or interest, to or in</div><div>immovable property except in so far as it entitles</div><div>the holder to the security afforded by a registered</div><div>instrument whereby the Company has mortgaged,</div><div>conveyed or otherwise transferred the whole or part</div><div>of its immovable property or any interest therein to</div><div>trustees upon trust for the benefit of the holders of</div><div>such debentures; or</div><div>(iv) any endorsement upon or transfer of any</div><div>debenture issued by any such Company; or</div><div>(v) [any document other than the documents</div><div>specified in subsection (1A)] not itself creating,</div><div>declaring, assigning, limiting or extinguishing any</div><div>right, title or interest of the value of one hundred</div><div>rupees and upwards to or in immovable property,</div><div>but merely creating a right to obtain another</div><div>document which will, when executed, create,</div><div>declare, assign, limit or extinguish any such right,</div><div>title or interest; or</div><div>(vi) any decree or order of a Court [except a decree</div><div>or order expressed to be made on a compromise</div><div>and comprising immovable property other than that</div><div>which is the subjectmatter of the suit or</div><div>proceeding]; or</div><div>(vii) any grant of immovable property by</div><div>[Government]; or</div><div>Page 18 of 26</div><div>(viii) any instrument of partition made by a</div><div>RevenueOfficer; or</div><div>(ix) any order granting a loan or instrument of</div><div>collateral security granted under the Land</div><div>Improvement Act, 1871, or the Land Improvement</div><div>Loans Act, 1883; or</div><div>(x) any order granting a loan under the</div><div>Agriculturists, Loans Act, 1884, or instrument for</div><div>securing the repayment of a loan made under that</div><div>Act; or</div><div>[(xa) any order made under the Charitable</div><div>Endowments Act, 1890 (6 of 1890), vesting any</div><div>property in a Treasurer of Charitable Endowments</div><div>or divesting any such Treasurer of any property; or]</div><div>(xi) any endorsement on a mortgagedeed</div><div>acknowledging the payment of the whole or any</div><div>part of the mortgagemoney, and any other receipt</div><div>for payment of money due under a mortgage when</div><div>the receipt does not purport to extinguish the</div><div>mortgage; or</div><div>(xii) any certificate of sale granted to the purchaser</div><div>of any property sold by public auction by a Civil or</div><div>RevenueOfficer.</div><div>[Explanation.—A document purporting or operating</div><div>to effect a contract for the sale of immovable</div><div>property shall not be deemed to require or ever to</div><div>have required registration by reason only of the fact</div><div>that such document contains a recital of the</div><div>payment of any earnest money or of the whole or</div><div>any part of the purchase money.]”</div><div>Page 19 of 26</div><div>8. By Tamil Nadu Amendment Act, 2012, Section</div><div>17(1)(g) has been inserted and “explanation” to</div><div>Section 17(2) has been omitted. Section 17(1)</div><div>(g) as inserted by Tamil Nadu Amendment Act,</div><div>2012, reads as under :</div><div>“17(1)(g) instruments of agreement relating to sale</div><div>of immovable property of the value of one hundred</div><div>rupees and upwards.”</div><div>9. Thus, on and after the Tamil Nadu</div><div>Amendment Act, 2012, as per Section 17(1) (g),</div><div>instrument of agreement relating to sale of</div><div>immovable property of the value of Rs.100/</div><div>and upwards is required to be registered</div><div>compulsorily. However, despite the same and</div><div>despite the “explanation” to subsection (2) of</div><div>Section 17 has been omitted, there is no</div><div>corresponding amendment made to Section 49</div><div>Page 20 of 26</div><div>of the Registration Act. Section 49 of the</div><div>Registration Act is as under :</div><div>“49. Effect of nonregistration of</div><div>documents required to be registered.—No</div><div>document required by section 17 [or by any</div><div>provision of the Transfer of Property Act, 1882</div><div>(4 of 1882)], to be registered shall—</div><div>(a) affect any immovable property comprised</div><div>therein, or </div><div>(b) confer any power to adopt, or </div><div>(c) be received as evidence of any transaction</div><div>affecting such property or conferring such</div><div>power,</div><div>unless it has been registered: </div><div>[Provided that an unregistered document</div><div>affecting immovable property and required by</div><div>this Act or the Transfer of Property Act, 1882 (4</div><div>of 1882), to be registered may be received as</div><div>evidence of a contract in a suit for specific</div><div>performance under Chapter II of the Specific</div><div>Relief Act, 1877 (3 of 1877) , *** or as evidence</div><div>of any collateral transaction not required to be</div><div>effected by registered instrument.]”</div><div>10. Thus, as per proviso to Section 49, an</div><div>unregistered document affecting the</div><div>Page 21 of 26</div><div>immovable property and required by</div><div>Registration Act to be registered may be</div><div>received as evidence of a contract in a suit for</div><div>specific performance under ChapterII of the</div><div>Specific Relief Act, 1877, or as evidence of any</div><div>collateral transaction not required to be</div><div>effected by registered document.</div><div>11. At this stage, the primary statement of objects</div><div>and reasons to the Tamil Nadu Amendment</div><div>Act, 2012, is also required to be referred to and</div><div>considered. The primary statement of objects</div><div>and reasons seem to suggest that amendment</div><div>has been introduced by the State of Tamil</div><div>Nadu bearing in mind the loss to the</div><div>exchequer as public were executing the</div><div>documents relating to sale of immovable</div><div>Page 22 of 26</div><div>property etc. on white paper or on stamp paper</div><div>of nominal value.</div><div>12. At this stage, it is required to be noted that the</div><div>proviso to Section 49 came to be inserted vide</div><div>Act No.21 of 1929 and thereafter, Section</div><div>17(1A) came to be inserted by Act No. 48 of</div><div>2001 with effect from 24.09.2001 by which the</div><div>documents containing contracts to transfer or</div><div>consideration any immovable property for the</div><div>purpose of Section 53 of the Transfer of</div><div>Properties Act is made compulsorily to be</div><div>registered if they have been executed on or</div><div>after 2001 and if such documents are not</div><div>registered on or after such commencement,</div><div>then there shall have no effect for the purposes</div><div>of said Section 53A. So, the exception to the</div><div>proviso to Section 49 is provided under Section</div><div>Page 23 of 26</div><div>17(1A) of the Registration Act. Otherwise, the</div><div>proviso to Section 49 with respect to the</div><div>documents other than referred to in Section</div><div>17(1A) shall be applicable.</div><div>13. Under the circumstances, as per proviso to</div><div>Section 49 of the Registration Act, an</div><div>unregistered document affecting immovable</div><div>property and required by Registration Act or</div><div>the Transfer of Property Act to be registered,</div><div>may be received as evidence of a contract in a</div><div>suit for specific performance under ChapterII</div><div>of the Specific Relief Act, 1877, or as evidence</div><div>of any collateral transaction not required to be</div><div>effected by registered instrument, however,</div><div>subject to Section 17(1A) of the Registration</div><div>Act. It is not the case on behalf of either of the</div><div>parties that the document/ Agreement to Sell</div><div>Page 24 of 26</div><div>in question would fall under the category of</div><div>document as per Section 17(1A) of the</div><div>Registration Act. Therefore, in the facts and</div><div>circumstances of the case, the High Court has</div><div>rightly observed and held relying upon proviso</div><div>to Section 49 of the Registration Act that the</div><div>unregistered document in question namely</div><div>unregistered Agreement to Sell in question</div><div>shall be admissible in evidence in a suit for</div><div>specific performance and the proviso is</div><div>exception to the first part of Section 49.</div><div>14. In view of the above and for the reasons stated</div><div>above, the present appeal fails and the same</div><div>deserves to be dismissed. It is accordingly</div><div>Page 25 of 26</div><div>dismissed. There shall be no orders as to</div><div>costs. </div><div>…………………………………J.</div><div> (M. R. SHAH)</div><div>…………………………………J.</div><div>(KRISHNA MURARI)</div><div>New Delhi, </div><div>April 10, 2023</div><div>Page 26 of 26</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-17485744012943959022023-04-10T06:21:00.005-07:002023-04-10T06:21:38.115-07:00Bhimashankar Sahakari Sakkare Karkhane Niyamita Versus Walchandnagar Industries Ltd. (WIL) <div>Bhimashankar Sahakari Sakkare Karkhane Niyamita Versus Walchandnagar Industries Ltd. (WIL) </div><div><br /></div>
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<p style="text-align: justify;"><b><a href="https://www.indianconstitution.in/p/landmark-judgments.html">Landmark Cases</a> of India / </b><span style="text-align: left;"><b><a href="https://www.indianconstitution.in/2021/09/100-100-landmark-cases-of-supreme-court.html">सुप्रीम कोर्ट के ऐतिहासिक फैसले</a></b></span></p>
<div><br /></div><div><br /></div><div>REPORTABLE</div><div>IN THE SUPREME COURT OF INDIA</div><div>CIVIL APPELLATE JURISDICTION</div><div> CIVIL APPEAL NO. 6810 of 2022</div><div>(@SLP (C) NO.11216 of 2022) </div><div>Bhimashankar Sahakari </div><div>Sakkare Karkhane Niyamita ..Appellant(s)</div><div>Versus</div><div>Walchandnagar Industries </div><div>Ltd. (WIL) ..Respondent(s)</div><div>J U D G M E N T</div><div>M. R. Shah, J.</div><div>1. Feeling aggrieved and dissatisfied with the</div><div>impugned judgment and order dated</div><div>Civil Appeal No. 6810 of 2022 Page 1 of 44</div><div>23.02.2022 passed by the High Court of</div><div>Karnataka, at Kalaburagi in Misc. First Appeal</div><div>No.201018/2018 by which the High Court has</div><div>dismissed the said appeal and has confirmed</div><div>the order dated 02.04.2018 passed by the</div><div>learned III Additional District & Sessions</div><div>Judge, Vijayapur (hereinafter referred to as</div><div>“trial Court”) in rejecting the application for</div><div>condonation of delay caused in preferring the</div><div>application under Section 34 of the Arbitration</div><div>and Conciliation Act, 1996 (hereinafter referred</div><div>to as “Arbitration Act”) , the original applicant</div><div>has preferred the present appeal. </div><div>2. The brief facts leading to filing of the present</div><div>appeal in nutshell are as under: </div><div>2.1 That, an arbitral award was passed against the</div><div>appellant under the provisions of the</div><div>Arbitration Act on 24.08.2016. As per Section</div><div>34(3) of the Arbitration Act, 90 days are</div><div>prescribed for preferring an application under</div><div>Section 34 of the Arbitration Act against the</div><div>arbitral award. However, the said period was</div><div>Civil Appeal No. 6810 of 2022 Page 2 of 44</div><div>extendable by a further period of 30 days in</div><div>terms of the proviso to Section 34(3) of the Act,</div><div>2016. In the present case, the period of 90</div><div>days prescribed under Section 34(3) of the</div><div>Arbitration Act expired on 24.11.2016. The</div><div>appellant was entitled to a further extended</div><div>period of 30 days from 23.11.2016 onwards in</div><div>terms of the proviso to Section 34(3) which was</div><div>upto 24.12.2016. </div><div>2.2 The trial Courts were closed on account of</div><div>winter / Christmas vacations from 19.12.2016</div><div>to 01.01.2017. However, it so happened that</div><div>extendable / condonable period of 30 days as</div><div>contemplated in the proviso to Section 34(3)</div><div>expired on 24.12.2016 on which day the trial</div><div>Court was closed on account of winter /</div><div>Christmas vacation. The appellant herein filed</div><div>the application under Section 34 of the</div><div>Arbitration Act, challenging the award passed</div><div>by the Arbitral Tribunal. The appellant also</div><div>filed IA No.1 for condonation of delay. Both,</div><div>Section 34 application as well as the</div><div>Civil Appeal No. 6810 of 2022 Page 3 of 44</div><div>application for condonation of delay were filed</div><div>on the reopening day i.e. on 02.01.2017. As</div><div>the application under Section 34 of the</div><div>Arbitration Act was beyond the prescribed</div><div>period of provided under Section 34 of the</div><div>Arbitration Act as well as beyond the</div><div>condonable period of 30 days, the learned trial</div><div>Court dismissed the IA No.1 and refused to</div><div>condone the delay by observing that the period</div><div>beyond 120 days is not condonable as under</div><div>the Arbitration Act, maximum period provided</div><div>for preferring an application under Section 34</div><div>is 120 days. At this stage it is required to be</div><div>noted that in the affidavit filed by the appellant</div><div>before the High Court, filed in support of IA</div><div>No.1, the appellant as such admitted that it</div><div>received the copy of the award on 24.08.2016.</div><div>However, according to the appellant, the said</div><div>award was misplaced and thereafter obtained a</div><div>fresh copy on 29.12.2016. The learned trial</div><div>Court observed that in that view of the matter,</div><div>the period of limitation would commence from</div><div>24.08.2016 and 120 days are to be counted</div><div>Civil Appeal No. 6810 of 2022 Page 4 of 44</div><div>from 24.08.2016. </div><div>2.3 Feeling aggrieved and dissatisfied with the</div><div>order passed by the learned trial Court</div><div>refusing to condone the delay in preferring</div><div>application under Section 34 of the Arbitration</div><div>Act, the appellant herein preferred an appeal</div><div>before the High Court. </div><div>2.4 Before the High Court, Section 4 of the</div><div>Limitation Act, 1963 and Section 10 of the</div><div>General Clauses Act, 1897 were pressed into</div><div>service. By the impugned judgment and order</div><div>the High Court has dismissed the said appeal</div><div>by observing that the expression “prescribed</div><div>period” appearing in Section 4 of the Limitation</div><div>Act cannot be construed to mean anything</div><div>other than the period of limitation and</div><div>therefore, any period beyond the prescribed</div><div>period, during which the Court or Tribunal has</div><div>the discretion to allow a person to institute the</div><div>proceeding, cannot be taken to be “prescribed</div><div>period”. </div><div>Civil Appeal No. 6810 of 2022 Page 5 of 44</div><div>2.5 Feeling aggrieved and dissatisfied with the</div><div>impugned judgment and order passed by the</div><div>High Court, the original applicant has</div><div>preferred the present appeal. </div><div>3. Shri Shyam Diwan, learned Senior Advocate</div><div>has appeared on behalf of the appellant and</div><div>Shri Dhruv Mehta, learned Senior Advocate</div><div>has appeared on behalf of the contesting</div><div>respondent. </div><div>4. Shri Shyam Diwan, learned Counsel has</div><div>submitted that Section 34(3) of the Arbitration</div><div>Act specifies that the limitation period for filing</div><div>an application for setting aside the arbitral</div><div>award under Section 34 is three months from</div><div>the date on which the party making application</div><div>has received the award. However, if the Court</div><div>is satisfied that the applicant was prevented by</div><div>sufficient cause from making the application</div><div>within the said period of three months, the</div><div>proviso to the Section specifies a further period</div><div>of 30 days within which the application under</div><div>Section 34 may be filed/entertained. </div><div>Civil Appeal No. 6810 of 2022 Page 6 of 44</div><div>4.1 It is submitted that the central question in the</div><div>present petition is whether when the last day</div><div>of condonable period of 30 days falls on a</div><div>holiday or during a court vacation, would the</div><div>benefit of Section 10 of the General Clauses</div><div>Act, 1897 would be available to the appellant?</div><div>4.2 It is submitted that in other words, can the</div><div>petitioner – appellant file the application on the</div><div>next date when the Court reopens, in line with</div><div>the settled principle that the law does not</div><div>compel a person to do an impossible act. It is</div><div>submitted that in the present case the</div><div>petitioner – appellant had filed the application</div><div>under Section 34 on the very day when the</div><div>Court reopened. </div><div>4.3 It is submitted by Shri Shyam Diwan, learned</div><div>Senior Counsel that not extending the benefit</div><div>of Section 10 of the General Clauses Act to the</div><div>appellant in such circumstances leads to an</div><div>anomalous situation wherein the benefit of</div><div>statutorily prescribed condonable period is cut</div><div>Civil Appeal No. 6810 of 2022 Page 7 of 44</div><div>short for some persons due to intervention of a</div><div>holiday or a court vacation, while being fully</div><div>available to other persons due to the fortuitous</div><div>circumstance of no court vacation intervening.</div><div>It is submitted that this creates uncertainty</div><div>and unpredictability in the application of</div><div>provision in question. </div><div>4.4 It is submitted that the present case reflects an</div><div>anomalous situation where Section 4 of the</div><div>Limitation Act, which only deals with the</div><div>period of limitation prescribed under the</div><div>Limitation Act, leaves a vacuum as far as</div><div>statutory condonable period is concerned. It is</div><div>submitted that the judgment in the case of</div><div>Assam Urban Water Supply and Sewerage</div><div>Board vs. Subash Projects and Marketing</div><div>Limited reported in (2012) 2 SCC 624 failed</div><div>to take into account that in the case of such</div><div>statutory condonable periods, Section 10 of the</div><div>General Clauses Act, 1897, which is much</div><div>wider in its import and applicability, and</div><div>embodies the same legal principle, must</div><div>Civil Appeal No. 6810 of 2022 Page 8 of 44</div><div>necessarily step in to fill the vacuum. </div><div>4.5 It is submitted that while passing the</div><div>impugned judgment and order, the High Court</div><div>has heavily relied upon the decision of this</div><div>Court in the case of Assam Urban (Supra)</div><div>while holding that the term “prescribed period”</div><div>referred to in Section 4 of the Limitation Act,</div><div>1963 only includes the limitation period and</div><div>not the 30day condonable / grace period. It is</div><div>submitted that however the case of Assam</div><div>Urban (Supra) does not notice or deal with</div><div>Section 10 of the General Clauses Act, 1897. It</div><div>only notices and deals with Section 4 of the</div><div>Limitation Act, 1963 and holds that the term</div><div>“prescribed period” mentioned in Section 4</div><div>means the period of limitation. It is submitted</div><div>that the judgment in the case of Assam Urban</div><div>(Supra) fails to notice that Section 4 of the</div><div>Limitation Act, 1963 which deals with the</div><div>period of limitation prescribed under the</div><div>Limitation Act, 1963, leaves a vacuum as far</div><div>as the statutory condonable period is</div><div>Civil Appeal No. 6810 of 2022 Page 9 of 44</div><div>concerned. </div><div>4.6 It is submitted that in failing to notice Section</div><div>10 of the General Clauses Act, 1897, the</div><div>judgment in the case of Assam Urban (Supra)</div><div>disregards the principle embodied in the</div><div>General Clauses Act which is much wider in its</div><div>import and applicability and must necessarily</div><div>step in to fill the vacuum left by Section 4 of</div><div>the Limitation Act. </div><div>4.7 It is further submitted by Shri Diwan, learned</div><div>Senior Counsel appearing for the appellant</div><div>that although the same general principle of</div><div>“elementary justice” is embodied in both</div><div>Sections of the two Acts, there is a crucial</div><div>distinction between the Limitation Act, 1963</div><div>and the General Clauses Act, 1897. </div><div>4.8 It is submitted that Section 2(j) of the</div><div>Limitation Act defines “period of limitation”. It</div><div>is submitted that thus, while the term</div><div>“prescribed period” has a narrower meaning in</div><div>the context of Limitation Act, there is no such</div><div>Civil Appeal No. 6810 of 2022 Page 10 of 44</div><div>restrictive definition clause in the General</div><div>Clauses Act. It is submitted that in fact, the</div><div>scheme of Section 10 of the General Clauses</div><div>Act is clear from a bare perusal of the provision</div><div>and indicates that there are two prescribed</div><div>periods in this Section viz. (1) the prescribed</div><div>period within which something is directed to be</div><div>done, or (2) the prescribed period within which</div><div>something is allowed to be done. </div><div>4.9 It is submitted that therefore, reading of</div><div>Section 10 of the General Clauses Act, 1897</div><div>makes it clear that the period in which</div><div>something is allowed to be done, such as 30</div><div>days condonable period provided by proviso to</div><div>Section 34(3) of the Arbitration Act is also a</div><div>prescribed period within the meaning of the</div><div>General Clauses Act, 1897. </div><div>4.10 It is further submitted by Shri Shyam Diwan,</div><div>learned Senior Counsel appearing on behalf of</div><div>the appellant that the principle embodied in</div><div>Section 10 of the General Clauses Act, 1897 is</div><div>an elementary piece of justice. It is submitted</div><div>Civil Appeal No. 6810 of 2022 Page 11 of 44</div><div>that the 60th Law Commission Report on the</div><div>General Clauses Act reiterated the</div><div>parliamentary intention behind the Act and the</div><div>provision, which is to deliver elementary</div><div>justice. </div><div>4.11 It is submitted that in the case of HUDA &</div><div>Anr. vs. Dr. Babeswar Kanhar & Anr.</div><div>reported in (2005) 1 SCC 191, this Court has</div><div>observed and held that every consideration of</div><div>justice and expediency would require that the</div><div>accepted principle which underlines Section 10</div><div>of the General Clauses Act, 1897 should be</div><div>applied in cases where it does not otherwise in</div><div>terms apply. It is observed that the principles</div><div>underlying are lex non cogit ad impossibilia (law</div><div>does not compel a man to do the impossible)</div><div>and actus curiae neminem gravabit (the act of</div><div>court shall prejudice no man). It is submitted</div><div>that in the case of Manohar Joshi vs. Nitin</div><div>Bhaurao Patil and Ors. reported in (1996) 1</div><div>SCC 169, it is observed and held by this Court</div><div>that the litigant has a right to avail limitation</div><div>Civil Appeal No. 6810 of 2022 Page 12 of 44</div><div>up to the last day and his only obligation is to</div><div>explain his inability to present the suit /</div><div>petition on the last day of limitation and each</div><div>day thereafter till it is actually presented. </div><div>4.12 It is further submitted that if as held in the</div><div>case of Assam Urban (Supra), the benefit of</div><div>Section 4 of the Limitation Act is only available</div><div>for the period of limitation and is not available</div><div>for the statutorily granted condonable period.</div><div>Section 10 of the General Clauses Act, 1897</div><div>must step in to fill the vacuum. It is submitted</div><div>that any contrary view would deny individuals</div><div>the full play of the statutory period of 30 days</div><div>for condonation of delay. </div><div>4.13 Now, so far as the contention on behalf of the</div><div>respondent that present proceeding is “any Act</div><div>or proceeding to which the Limitation Act</div><div>applies” is a misconceived argument is</div><div>concerned, it is submitted that the</div><div>respondents have sought to rely on proviso to</div><div>Section 10 of the General Clauses Act, 1897.</div><div>Relying upon Section 43(1) of the Arbitration</div><div>Civil Appeal No. 6810 of 2022 Page 13 of 44</div><div>Act to contend that the Limitation Act applies</div><div>to the present proceedings, it is submitted that</div><div>Section 43(1) of the Arbitration Act merely</div><div>states that “the Limitation Act, 1963 shall</div><div>apply to arbitrations as it applies to</div><div>proceedings in Court”. It is submitted that this</div><div>cannot be interpreted to mean that the</div><div>Limitation Act, in its entirety applies to</div><div>proceeding under Section 34 of the Arbitration</div><div>Act and that the present proceedings are an</div><div>act or proceeding to which the Limitation Act</div><div>applies. It is submitted that in fact, in matters</div><div>of limitation, Section 34 of the Arbitration Act</div><div>is a complete code. It is submitted that the</div><div>respondent’s entire case, on one hand, is that</div><div>the benefit of Limitation Act, particularly</div><div>Section 4 of the Limitation Act, cannot be given</div><div>to the condonable period in the instant case. It</div><div>is submitted that therefore on one hand, the</div><div>respondent is arguing that the benefit of</div><div>Section 4 of the Limitation Act, as well as</div><div>Section 5 of the Limitation Act has no</div><div>application to the condonable period under</div><div>Civil Appeal No. 6810 of 2022 Page 14 of 44</div><div>Section 34 of the Arbitration Act, i.e. the</div><div>Limitation Act has no application in the</div><div>present proceedings, at the same time, the</div><div>respondent is contending that the benefit of</div><div>Section 10 of the General Clauses Act, 1897</div><div>cannot be given to the appellant, as the</div><div>present proceeding falls within the ambit of the</div><div>phrase “any act or proceeding to which the</div><div>Indian Limitation Act, 1877, applies”.</div><div>4.14 It is further submitted by Shri Diwan, learned</div><div>Senior Counsel that the reliance placed on the</div><div>case of Sagufa Ahmed & Ors. vs. Upper</div><div>Assam Polywood Products Private Limited</div><div>and Others reported in (2021) 2 SCC 317 is</div><div>misconceived for the following two reasons:</div><div>(1) The reference to Section 10 of the General</div><div>Clauses Act, 1897 in the case of Sagufa</div><div>Ahmed (Supra) is tangential at best;</div><div>(2) The facts of Sagufa Ahmed (Supra) are</div><div>clearly distinguishable from the case at</div><div>hand. In that case, the appellants had</div><div>waited 5 months after the discretionary</div><div>Civil Appeal No. 6810 of 2022 Page 15 of 44</div><div>period had expired to file an appeal against</div><div>the order of the Ld. NCLT. In the present</div><div>case, there was no undue delay on the part</div><div>of the Petitioner appellant herein. The</div><div>petitioner appellant filed the petition under</div><div>Section 34 of the very day of the reopening</div><div>of the Ld. Court. </div><div>4.15 It is submitted that this Court in its order</div><div>dated 08.03.2021 in suo moto Writ Petition</div><div>(Civil) No.3/2020, has put a quietus to the</div><div>artificial distinction between the ‘limitation</div><div>period’ and ‘grace period’, wherein it extended</div><div>the benefit of exemption due to COVID 19 to</div><div>the limitation period as well as the condonable</div><div>period. </div><div>4.16 It is further submitted by Shri Diwan, learned</div><div>Senior Counsel that the aim and object of the</div><div>limitation period and statutory grace period /</div><div>condonable period provided in the Arbitration</div><div>Act is to ensure that parties who sleep over</div><div>their rights and come to the court belatedly are</div><div>not allowed to upset the apple cart. It is</div><div>Civil Appeal No. 6810 of 2022 Page 16 of 44</div><div>submitted that in the present instance, the</div><div>appellant has been nothing but diligent and</div><div>approached the learned trial Court on the very</div><div>day of reopening. It is submitted that Section</div><div>10 of the General Clauses Act, 1897 has been</div><div>enacted to address precisely this kind of a</div><div>situation and merely because the benefit of</div><div>Section 4 of the Limitation Act, 1963 is</div><div>unavailable in a case, should not ipso facto</div><div>exclude the application of the General Clauses</div><div>Act, 1897. </div><div>4.17 It is submitted that the appellant is an</div><div>agriculturists’ society, and despite having</div><div>suffered losses due to nonfulfillment of their</div><div>obligations by the respondent, the appellant’s</div><div>case has never been heard on merits. It is</div><div>submitted that therefore nonsuiting the</div><div>appellant in the present instance and denying</div><div>the benefit of Section 10 of the General</div><div>Clauses Act, 1897 (with the elementary rule of</div><div>justice captured in it) will cause a grave</div><div>miscarriage of justice. </div><div>Civil Appeal No. 6810 of 2022 Page 17 of 44</div><div>Making above submissions, it is prayed to</div><div>set aside the order passed by the learned trial</div><div>Court as well as the High Court and to</div><div>condone the delay caused in preferring</div><div>application under Section 34 of the Arbitration</div><div>Act and to direct the learned trial Court to hear</div><div>the application under Section 34 of the</div><div>Arbitration Act on merits by giving the</div><div>appellant an opportunity to put forth its case</div><div>on merits. </div><div>5. Present appeal is vehemently opposed by Shri</div><div>Dhruv Mehta, learned Senior Counsel</div><div>appearing on behalf of the respondent. </div><div>5.1 It is submitted that in the present case the</div><div>appellant admittedly received the award on</div><div>24.08.2016. As per Section 34 of the</div><div>Arbitration Act, “the prescribed period” of 3</div><div>months to challenge the award expired on</div><div>24.11.2016 and further period of 30 days</div><div>under the proviso to Section 34(3) of the</div><div>Arbitration Act expired on 24.12.2016. That,</div><div>the learned trial Court was on winter vacation</div><div>Civil Appeal No. 6810 of 2022 Page 18 of 44</div><div>between 19.12.2016 to 01.01.2017. The</div><div>appellant preferred its Section 34 of the</div><div>Arbitration Act before the learned trial Court</div><div>on 02.01.2017 i.e. on the day of reopening,</div><div>accompanied by an application seeking</div><div>condonation of delay. It is submitted that the</div><div>learned trial Court after considering both, the</div><div>maintainability and merits of the appellant’s</div><div>application for condonation, has found that the</div><div>application was not maintainable and also that</div><div>no sufficient cause had been shown by the</div><div>appellant. It is submitted that the High Court</div><div>has upheld the order of trial Court that the</div><div>petition under Section 34 of the Arbitration Act</div><div>was not maintainable for being beyond the</div><div>“prescribed period” under Section 34(3) of the</div><div>Arbitration Act. It is submitted that therefore</div><div>the following questions arise for consideration</div><div>in the present case. </div><div>(1)Whether the benefit of Section 4 of the</div><div>Limitation Act, 1963 is available to a party</div><div>when the “prescribed period” of 3 months for</div><div>filing a petition under Section 34(3) of the</div><div>Civil Appeal No. 6810 of 2022 Page 19 of 44</div><div>Arbitration Act has already expired and the</div><div>discretionary period of 30 days under the</div><div>proviso to Section 34(3) falls on a day when</div><div>the Court is closed?</div><div>(2)Whether the benefit of Section 10 of the</div><div>General Clauses Act,1897 is separately</div><div>available to a party in such circumstances?</div><div>5.2 Now, so far as the applicability of Section 4 of</div><div>the Limitation Act is concerned, it is</div><div>vehemently submitted by Shri Dhruv Mehta,</div><div>learned Senior Counsel that Section 4 of the</div><div>Limitation Act shall not be applicable to the 30</div><div>days’ discretionary condonable period</div><div>contemplated under proviso to Section 34(3) of</div><div>the Arbitration Act. It is submitted that Section</div><div>34(3) of the Arbitration Act stipulates that an</div><div>application under Section 34(1) of the</div><div>Arbitration Act challenging an arbitral award</div><div>may not be made after a period of three</div><div>months from the date on which the party</div><div>making the application had received the</div><div>Civil Appeal No. 6810 of 2022 Page 20 of 44</div><div>arbitral award. The proviso to Section 34(3)</div><div>gives limited powers to the Court, on sufficient</div><div>cause being shown, to condone delay in filing</div><div>the application under Section 34(1) only for a</div><div>maximum period of 30 days, but not</div><div>thereafter. It is submitted that in the case of</div><div>Union of India v. Popular Construction Co.</div><div>reported in (2001) 8 SCC 470 (Paras 10, 12,</div><div>14 and 16), this Court has observed that</div><div>usage of words “but not thereafter” in the</div><div>proviso to Section 34(3) amounts to an express</div><div>exclusion within the meaning of Section 29(2)</div><div>of the Limitation Act. Therefore, the Court</div><div>would have no discretion to condone the delay</div><div>in excess of 30 days. Section 5 of the</div><div>Limitation Act was, therefore, held to be</div><div>inapplicable to Section 34(1) of the Arbitration</div><div>Act. </div><div>5.3 It is submitted that Section 4 of the Limitation</div><div>Act is only applicable when the last date of the</div><div>“prescribed period” falls on a day on which the</div><div>Court is closed. It is submitted that the term,</div><div>Civil Appeal No. 6810 of 2022 Page 21 of 44</div><div>“prescribed period” is defined in Section 2(j) of</div><div>the Limitation Act as being the period of</div><div>limitation computed in accordance with the</div><div>provisions of the Limitation Act. </div><div>5.4 It is submitted that this Court in the case of</div><div>Assam Urban (Supra) (Paras 10 to 14) has</div><div>held that “prescribed period” under Section</div><div>34(3) of the Arbitration Act is three months. It</div><div>is submitted that “further period” of 30 days</div><div>mentioned in the proviso to Section 34(3) of the</div><div>Arbitration Act cannot be said to be the “period</div><div>of limitation” and therefore, would not be the</div><div>“prescribed period” for the purposes of making</div><div>an application for setting aside the arbitral</div><div>award. It is submitted that thus, in the said</div><div>decision, this Court has categorically held that</div><div>Section 4 of the Limitation Act which applies</div><div>only to “prescribed period” is not attracted</div><div>when the last date of the “further period” of 30</div><div>days mentioned in Section 34(3) of the</div><div>Limitation Act falls on a day on which the</div><div>Court is closed. It is submitted that the facts of</div><div>Civil Appeal No. 6810 of 2022 Page 22 of 44</div><div>the case in Assam Urban (Supra) are identical</div><div>to the facts of the present case. It is submitted</div><div>that decision of this Court in the case of</div><div>Assam Urban (Supra) has been affirmed by</div><div>Three Judges’ Bench of this Court in the case</div><div>of Sagufa Ahmed (Supra) (Paras 20 – 22). </div><div>5.5 It is further submitted by Shri Dhruv Mehta,</div><div>learned Senior Counsel that the correct</div><div>application of Section 4 of the Limitation Act</div><div>will result in a petition being entertained as a</div><div>matter of right, without a party having to seek</div><div>condonation of delay, since it applies only to</div><div>petitions that would otherwise be within the</div><div>“prescribed period” but its presentation within</div><div>this period has been prevented due to closure</div><div>of the Court. However, on the other hand, this</div><div>cannot apply to a delayed petition where, in</div><div>any event, the right to present the petition is</div><div>subject sufficient cause being shown and</div><div>condonation of delay being sought. </div><div>5.6 Now, so far as the submission on behalf of the</div><div>appellant that the judgment in the case of</div><div>Civil Appeal No. 6810 of 2022 Page 23 of 44</div><div>Sagufa Ahmed (Supra) is not a good law or is</div><div>distinguishable is concerned, it is submitted</div><div>that as such the decision in the case of Sagufa</div><div>Ahmed (Supra) lays down the correct law and</div><div>shall be applicable with full force on</div><div>interpretation of “to condone delay within</div><div>further period”. </div><div>5.7 It is submitted that the judgment in the case of</div><div>Sagufa Ahmed (Supra), in the context of</div><div>Section 421(3) of the Companies Act, 2013,</div><div>which provides a prescribed period of 45 days</div><div>for filing an appeal, and empowers the</div><div>appellate Tribunal to condone the delay within</div><div>“further period” not exceeding 45 days. A</div><div>ThreeJudges Bench of this Court rejected the</div><div>contention of the appellants therein that the</div><div>benefit of order of this Court dated 23.03.2020</div><div>in Cognizance for Extension of Limitation, In</div><div>re, (2020) 19 SCC 10, is extendable to them, by</div><div>holding that under the order dated</div><div>23.03.2020, which was extended was only “the</div><div>period of limitation” and not the period up to</div><div>Civil Appeal No. 6810 of 2022 Page 24 of 44</div><div>which delay can be condoned in exercise of</div><div>discretion conferred by statute.</div><div>5.8 It is submitted that thus, in the case of Sagufa</div><div>Ahmed (Supra), this Court while affirming</div><div>Assam Urban (Supra) has held that the</div><div>expression “prescribed period” appearing in</div><div>Section 4 of the Limitation Act cannot be</div><div>construed to mean anything other than the</div><div>period of limitation. Any period beyond the</div><div>“prescribed period” during which the Court or</div><div>Tribunal has the discretion to allow a person to</div><div>institute the proceedings cannot be taken to be</div><div>“prescribed period”. </div><div>5.9 Now, so far as the submission on behalf of the</div><div>appellant that the judgment in the case of</div><div>Assam Urban (Supra) has the effect of denying</div><div>the parties to right to file their application for</div><div>condonation in situation where the</div><div>discretionary period expires during vacation</div><div>and that such interpretation was incorrect</div><div>inasmuch as it leaves parties at the mercy of</div><div>“fortuitous circumstance”, it is submitted that</div><div>Civil Appeal No. 6810 of 2022 Page 25 of 44</div><div>such a submission is not tenable. It is</div><div>submitted that the Court vacations are notified</div><div>well in advance and would not account to a</div><div>fortuitous circumstance as alleged. It is</div><div>submitted that on the date of receipt of award,</div><div>the party would be well aware of the limitation</div><div>period under Section 34(3) of the Arbitration</div><div>Act and ought to diligently secure its right. It is</div><div>submitted that in the present case, having</div><div>received the award on 24.08.2016, the</div><div>appellant had a further period of 25 days after</div><div>expiry of “prescribed period” and before</div><div>commencement of the winter vacation of the</div><div>trial Court. However, the petitioner appellant</div><div>chose not to file its petition during this time</div><div>and therefore, as to suffer for the inevitable</div><div>consequences. </div><div>5.10 It is further submitted that right under Section</div><div>34 of the Arbitration Act is a restricted right to</div><div>challenge an award on extremely limited</div><div>ground. The proviso to Section 34(3) of the</div><div>Arbitration Act further excludes the general</div><div>Civil Appeal No. 6810 of 2022 Page 26 of 44</div><div>power of the Court under Section 5 of the</div><div>Limitation Act and imposes a strict timeline for</div><div>presentation of a petition under Section 34. In</div><div>such circumstances, acceptance of appellant’s</div><div>argument will have the effect of providing an</div><div>unduly enlarged time period (beyond the</div><div>statutory 30 day discretionary period) for</div><div>delayed presentation of a petition under</div><div>Section 34, which would be contrary to the</div><div>scheme and intent of the Arbitration Act. </div><div>5.11 Now, so far as the applicability of Section 10 of</div><div>the General Clauses Act, 1897 as per the case</div><div>of the appellant is concerned, it is vehemently</div><div>submitted that as such the contention is</div><div>untenable in light of the proviso to Section 10</div><div>of the General Clauses Act, 1897, which</div><div>specifically excludes the application of this</div><div>section to any Act or proceeding to which the</div><div>Indian Limitation Act applies. It is submitted</div><div>that reference to 1877 Act will now have to be</div><div>read as reference to Limitation Act, 1963 in</div><div>view of section 8 of the General Clauses Act,</div><div>Civil Appeal No. 6810 of 2022 Page 27 of 44</div><div>1897. It is submitted that it is no longer res</div><div>integra that the Limitation Act, 1963 applies to</div><div>arbitrations and court proceedings arising out</div><div>of the arbitrations in light of Section 41(3) of</div><div>the Arbitration Act. Reliance is placed upon the</div><div>decision of this Court in the case of State of</div><div>Maharashtra v. Borse Brothers Engineers</div><div>and Contractors Pvt. Ltd. reported in (2021)</div><div>6 SCC 460 and Consolidated Engineering</div><div>Enterprises vs. Principal Secretary,</div><div>Irrigation Department and Ors. reported in</div><div>(2008) 7 SCC 169. It is submitted that</div><div>therefore in light of the application of the</div><div>Limitation Act, 1963 applicable to the</div><div>proceedings under the Arbitration Act (both in</div><div>Court and in arbitration), Section 10 of the</div><div>General Clauses Act, 1897 is specifically</div><div>excluded, and therefore, cannot be relied upon</div><div>by the appellant. </div><div>5.12 It is submitted that even otherwise this Court</div><div>in the Sagufa Ahmed (Supra) has held that</div><div>the principle forming the basis of Section 10(1)</div><div>Civil Appeal No. 6810 of 2022 Page 28 of 44</div><div>of the General Clauses Act, 1897 also finds a</div><div>place in Section 4 of the Limitation Act.</div><div>Therefore, when the benefit of Section 4 of the</div><div>Arbitration Act is not available, the appellant</div><div>cannot seek to take recourse to Section 10 of</div><div>the General Clauses Act, 1897 which embodies</div><div>the same principle. </div><div>5.13 It is further submitted that just like Section 4</div><div>of the Limitation Act, Section 10 of the General</div><div>Clauses Act, 1897 also uses the term</div><div>“prescribed period”. Section 10 of the General</div><div>Clauses Act, 1897 provides that where any act</div><div>is directed to be done on a certain day, or any</div><div>proceeding is allowed to be done in any Court</div><div>or office within prescribed period, if the Court</div><div>or office is closed on that certain day, or the</div><div>last day of the prescribed period, it may be</div><div>done or taken on the next working day.</div><div>Accordingly, if Section 10 of the General</div><div>Clauses Act, 1897 was to be applicable, the</div><div>term “prescribed period” must be given the</div><div>same meaning as that in the Limitation Act.</div><div>Thus, Section 10 of the General Clauses Act,</div><div>Civil Appeal No. 6810 of 2022 Page 29 of 44</div><div>1897 will also only then apply for the</div><div>prescribed period of three months under</div><div>Section 34(3) of the Arbitration Act and not to</div><div>the discretionary period of 30 days under the</div><div>proviso to Section 34(3) of the Arbitration Act. </div><div>Making above submissions and relying</div><div>upon the decision of this Court in the case of</div><div>Assam Urban (Supra) and Sagufa Ahmed</div><div>(Supra), it is prayed to dismiss the present</div><div>appeal. </div><div>6. Having heard learned Counsel appearing for</div><div>the respective parties, a short question which</div><div>is posed for consideration of this Court is</div><div>whether in the facts and circumstances of the</div><div>case, the learned trial Court was justified in</div><div>not condoning the delay in preferring the</div><div>application under Section 34(3) of the</div><div>Arbitration Act, which was filed after the expiry</div><div>of 120 days but filed on the first day of</div><div>reopening after the winter / Christmas</div><div>vacation and in a case where the condonable</div><div>period of 30 days under Section 34(3) of the</div><div>Civil Appeal No. 6810 of 2022 Page 30 of 44</div><div>Arbitration Act had fallen during the winter /</div><div>Christmas vacation ? The question is with</div><div>respect to applicability of Section 4 of the</div><div>Limitation and Section 10 of the General</div><div>Clauses Act, 1897 in the facts and</div><div>circumstances of the case. </div><div>Therefore, the central question in the</div><div>present appeal is whether when the last day of</div><div>condonable period of 30 days (under Section</div><div>34(3) of the Arbitration Act) falls on holiday or</div><div>during the Court vacation, would the benefit of</div><div>Section 10 of the General Clauses Act, 1897 be</div><div>available? </div><div>7. While considering the aforesaid issues/</div><div>questions, Section 34 of the Arbitration Act is</div><div>required to be referred to, which reads as</div><div>under:</div><div>“34. Application for setting aside</div><div>arbitral award. (3) An application for</div><div>setting aside may not be made after</div><div>three months have elapsed from the</div><div>date on which the party making that</div><div>Civil Appeal No. 6810 of 2022 Page 31 of 44</div><div>application had received the arbitral</div><div>award or, if a request had been made</div><div>under section 33, from the date on</div><div>which that request had been disposed</div><div>of by the arbitral Tribunal:</div><div>Provided that if the Court is</div><div>satisfied that the applicant was</div><div>prevented by sufficient cause from</div><div>making the application within the said</div><div>period of three months it may entertain</div><div>the application within a further period</div><div>of thirty days, but not thereafter.”</div><div>The relevant provisions of the Indian</div><div>Limitation Act and the General Clauses Act,</div><div>1897 are also required to be referred to which</div><div>are as under: </div><div>“2.(j) ‘period of limitation’ (which)</div><div>means the period of limitation</div><div>prescribed for any suit, appeal or</div><div>application by the Schedule, and</div><div>‘prescribed period’ means the period of</div><div>limitation computed in accordance with</div><div>the provisions of this Act;”</div><div>“4. Expiry of prescribed period</div><div>when court is closed. Where the</div><div>prescribed period for any suit, appeal</div><div>or application expires on a day when</div><div>the court is closed, the suit, appeal or</div><div>application may be instituted,</div><div>Civil Appeal No. 6810 of 2022 Page 32 of 44</div><div>preferred or made on the day when the</div><div>court reopens.</div><div>Explanation. A court shall be</div><div>deemed to be closed on any day within</div><div>the meaning of this section if during</div><div>any part of its normal working hours it</div><div>remains closed on that day.”</div><div>“Section 10 of the General Clauses Act,</div><div>1897</div><div>10. Computation of time. (1) Where,</div><div>by any 47 (Central Act) or Regulation</div><div>made after the commencement of this</div><div>Act, any act or proceeding is directed</div><div>or allowed to be done or taken in any</div><div>Court or office on a certain day or</div><div>within a prescribed period, then, if the</div><div>Court or office is closed on that day or</div><div>the last day of the prescribed period,</div><div>the act or proceeding shall be</div><div>considered as done or taken in due</div><div>time if it is done or taken on the next</div><div>day afterwards on which the Court or</div><div>office is open:</div><div>Provided that nothing in this</div><div>section shall apply to any act or</div><div>proceeding to which the Indian</div><div>Limitation Act, 1877, 48 applies.</div><div>(2) This section applies also to</div><div>all 49 (Central Acts) and Regulations</div><div>made on or after the fourteenth day of</div><div>January, 1887.”</div><div>(emphasis supplied)”</div><div>Civil Appeal No. 6810 of 2022 Page 33 of 44</div><div>7.1 Section 34(3) of the Arbitration Act and</div><div>Sections 2(j) and 4 of the Limitation Act, 1963</div><div>fell for consideration before this Court in the</div><div>case of Assam Urban (Supra). Even the very</div><div>issue raised in the present appeal fell for</div><div>consideration before this Court in the case of</div><div>Assam Urban (Supra). In the aforesaid</div><div>decision, this Court interpreted the aforesaid</div><div>provisions and has specifically observed and</div><div>held that the benefit of exclusion of period</div><div>during which Court is closed is available only</div><div>when application for setting aside the award is</div><div>filed within ‘prescribed period of limitation’ and</div><div>it is not available in respect of period</div><div>extendable by the Court in exercise of its</div><div>discretion. By holding so, this Court</div><div>considered the earlier decisions in the case of</div><div>Popular Construction Co. (Supra) and State</div><div>of Maharashtra vs. Hindustan Construction</div><div>Co. Ltd. reported in (2010) 4 SCC 518 and</div><div>has observed and held in paragraphs 6 to 9 as</div><div>under: </div><div>Civil Appeal No. 6810 of 2022 Page 34 of 44</div><div>“6. Section 34(3) of the 1996 Act provides</div><div>that an application for setting aside an award</div><div>may be made within three months of the</div><div>receipt of the arbitral award. The proviso that</div><div>follows subsection (3) of Section 34 provides</div><div>that on sufficient cause being shown, the</div><div>court may entertain the application for</div><div>setting aside the award after the period of</div><div>three months and within a further period of</div><div>30 days but not thereafter. </div><div>7. In Popular Construction Co.1</div><div>, this Court has</div><div>held that an application for setting aside an</div><div>award filed beyond the period mentioned in</div><div>Section 34(3) would not be an application "in</div><div>accordance with subsection (3) as required</div><div>under Section 34(1) of the 1996 Act" and</div><div>Section 5 of the 1963 Act has no application</div><div>to such application. In para 12 of the Report,</div><div>it was held in Popular Construction Co.1</div><div>thus: (SCC pp.47475)</div><div>"12. As far as the language of Section 34</div><div>of the 1996 Act is concerned, the crucial</div><div>words are "but not thereafter" used in</div><div>the proviso to subsection (3). In our</div><div>opinion, this phrase would amount to an</div><div>express exclusion within the meaning of</div><div>Section 29(2) of the Limitation Act, and</div><div>would therefore bar the application of</div><div>Section 5 of that Act. Parliament did not</div><div>need to go further. To hold that the court</div><div>could entertain an application to set</div><div>aside the award beyond the extended</div><div>period under the proviso, would render</div><div>the phrase "but not thereafter" wholly</div><div>otiose. No principle of interpretation</div><div>would justify such a result".</div><div>Civil Appeal No. 6810 of 2022 Page 35 of 44</div><div>8. Recently, in State of Maharashtra v.</div><div>Hindustan Construction Company Limited2</div><div>, a</div><div>twoJudge Bench of this Court speaking</div><div>through one of us (R.M. Lodha, J.)</div><div>emphasised the mandatory nature of the limit</div><div>to the extension of the period provided in</div><div>proviso to Section 34(3) and held that an</div><div>application for setting aside arbitral award</div><div>under Section 34 of the 1996 Act has to be</div><div>made within the time prescribed under subsection (3) of Section 34 i.e., within three</div><div>months and a further period of 30 days on</div><div>sufficient cause being shown and not</div><div>thereafter.</div><div>9. Section 43(1) of the 1996 Act provides that</div><div>the 1963 Act shall apply to arbitrations as it</div><div>applies to proceedings in court. The 1963 Act</div><div>is thus applicable to the matters of</div><div>arbitration covered by the 1996 Act save and</div><div>except to the extent its applicability has been</div><div>excluded by virtue of the express provision</div><div>contained in Section 34(3) of the 1996 Act.”</div><div>Before this Court there existed, similar facts</div><div>like in the present case. In the case before this</div><div>Court, the arbitral awards were received by the</div><div>appellants on 26.08.2003. No application for</div><div>setting aside the arbitral award was made</div><div>before elapse of three months from the receipt</div><div>thereof. Three months from the date of receipt</div><div>of the award expired on 26.11.2003. The</div><div>Civil Appeal No. 6810 of 2022 Page 36 of 44</div><div>District Court had Christmas vacation for the</div><div>period from 25.12.2003 to 01.01.2004. On</div><div>reopening of the Court i.e. on 02.01.2004, the</div><div>appellants made application for setting aside</div><div>the award under Section 34 of the Arbitration</div><div>Act. Considering the aforesaid facts and</div><div>thereafter considering Sections 2(j) and 4 of the</div><div>Indian Limitation Act, 1963, this Court</div><div>observed and held and concluded in</div><div>paragraphs 11 to 15 as under: </div><div>“11. The question, therefore, that falls for</div><div>our determination is whether the</div><div>appellants are entitled to extension of time</div><div>under Section 4 of the 1963 Act in the</div><div>above facts?</div><div>12. Section 4 of the 1963 Act reads as</div><div>under :</div><div>"4. Expiry of prescribed period</div><div>when court is closed. Where the</div><div>prescribed period for any suit,</div><div>appeal or application expires on a</div><div>day when the court is closed, the</div><div>suit, appeal or application may be</div><div>instituted, preferred or made on the</div><div>day when the court reopens.</div><div>Explanation. A court shall be</div><div>deemed to be closed on any day</div><div>Civil Appeal No. 6810 of 2022 Page 37 of 44</div><div>within the meaning of this section</div><div>if during any part of its normal</div><div>working hours it remains closed on</div><div>that day."</div><div>The above Section enables a party to</div><div>institute a suit, prefer an appeal or make an</div><div>application on the day court reopens where</div><div>the prescribed period for any suit, appeal or</div><div>application expires on the day when the</div><div>court is closed. </div><div>13. The crucial words in Section 4 of the</div><div>1963 Act are “prescribed period”. What is</div><div>the meaning of these words?</div><div>14. Section 2(j) of the 1963 Act defines:</div><div>“2(j) ‘period of limitation' [which] means the</div><div>period of limitation prescribed for any suit,</div><div>appeal or application by the Schedule, and</div><div>'prescribed period' means the period of</div><div>limitation computed in accordance with the</div><div>provisions of this Act.”</div><div>Section 2(j) of the 1963 Act when read in</div><div>the context of Section 34(3) of the 1996 Act,</div><div>it becomes amply clear that the prescribed</div><div>period for making an application for setting</div><div>aside an arbitral award is three months.</div><div>The period of 30 days mentioned in proviso</div><div>that follows subsection (3) of Section 34 of</div><div>the 1996 Act is not the “period of limitation”</div><div>and, therefore, not the “prescribed period”</div><div>Civil Appeal No. 6810 of 2022 Page 38 of 44</div><div>for the purposes of making the application</div><div>for setting aside the arbitral award. The</div><div>period of 30 days beyond three months</div><div>which the court may extend on sufficient</div><div>cause being shown under the proviso</div><div>appended to subsection (3) of Section 34 of</div><div>the 1996 Act being not the “period of</div><div>limitation” or, in other words, the</div><div>“prescribed period”, in our opinion, Section</div><div>4 of the 1963 Act is not, at all, attracted to</div><div>the facts of the present case.</div><div>15. Seen thus, the applications made by the</div><div>appellants on 212004 for setting aside the</div><div>arbitral award dated 2682003 were liable</div><div>to be dismissed and have rightly been</div><div>dismissed by the District Judge, Kamrup,</div><div>Guwahati, as timebarred.”</div><div>Therefore, as such the question involved</div><div>in the present appeal is squarely answered</div><div>against the appellant and the said issue is as</div><div>such not res integra. </div><div>8. Now, so far as the submission on behalf of the</div><div>appellant that the Limitation Act shall not be</div><div>applicable to the proceedings under the</div><div>Arbitration Act is concerned, the aforesaid has</div><div>no substance. Section 43(1) of the Arbitration</div><div>Act specifically provides that Limitation Act,</div><div>Civil Appeal No. 6810 of 2022 Page 39 of 44</div><div>1963 shall apply to arbitrations as it applies to</div><div>proceeding in Court. However, as observed and</div><div>held by this Court in the case of Assam Urban</div><div>(Supra), Limitation Act, 1963 shall be</div><div>applicable to the matters of arbitration covered</div><div>by 1996 Act save and except to the extent its</div><div>applicability has been excluded by virtue of</div><div>express provision contained in Section 34(3) of</div><div>the Arbitration Act. </div><div>8.1 In the case of Popular Construction Co.</div><div>(Supra), when section 5 of the Limitation Act</div><div>was pressed into service to proceedings under</div><div>Section 34 of the Arbitration Act for setting</div><div>aside the arbitral award, this Court has</div><div>observed that the Arbitration Act being a</div><div>special law and provides a period of limitation</div><div>different from that prescribed under the</div><div>Limitation Act, the period of limitation</div><div>prescribed under the Arbitration Act shall</div><div>prevail and shall be applicable and to that</div><div>extent the Limitation Act shall be excluded.</div><div>That, thereafter, it is observed and held that</div><div>Civil Appeal No. 6810 of 2022 Page 40 of 44</div><div>application challenging an award filed beyond</div><div>period mentioned in Section 34(3) of the</div><div>Arbitration Act would not be an application “in</div><div>accordance with” subsection (3) as required</div><div>under Section 34(1) of the Arbitration Act. </div><div>8.2 In the case of Hindustan Construction</div><div>Company Ltd. (Supra), in fact this Court has</div><div>emphasized the mandatory nature of limit to</div><div>the extension of period provided in proviso to</div><div>Section 34(3) and has held that an application</div><div>for setting aside an arbitral award under</div><div>Section 34 of the Arbitration Act has to be</div><div>made within time prescribed under subsection</div><div>(3) of Section 34 i.e. within three months and a</div><div>further period of 30 days on sufficient cause</div><div>being shown and not thereafter. </div><div>9. Now, so far as reliance placed upon Section 10</div><div>of the General Clauses Act, 1897 on behalf of</div><div>the appellant is concerned, at the outset it is</div><div>required to be noted that such a contention is</div><div>untenable in light of the proviso to Section 10</div><div>Civil Appeal No. 6810 of 2022 Page 41 of 44</div><div>of the General Clauses Act, 1897, which</div><div>specifically excludes the application of Section</div><div>10 of the General Clauses Act, 1897 to any act</div><div>or proceeding to which the Indian Limitation</div><div>Act, 1877 applies. Reference to 1877 Act will</div><div>now have to be read as reference to Limitation</div><div>Act, 1963 in view of Section 8 of the General</div><div>Clauses Act, 1897. Therefore, in light of the</div><div>application of Limitation Act, 1963 to the</div><div>proceedings under the Arbitration Act and</div><div>when Section 10 of the General Clauses Act,</div><div>1897 specifically excludes the applicability of</div><div>Section 10 to any act or proceeding to which</div><div>Indian Limitation Act, 1963 applies and in</div><div>light of the definition of “period of limitation” as</div><div>defined under Section 2(j) read with Section 4</div><div>of the Limitation Act and as observed and held</div><div>by this Court in the case of Assam Urban</div><div>(Supra), benefit of exclusion of period during</div><div>which the Court is closed shall be available</div><div>when the application for setting aside award is</div><div>filed within “prescribed period of limitation”</div><div>and shall not be available in respect of period</div><div>Civil Appeal No. 6810 of 2022 Page 42 of 44</div><div>extendable by Court in exercise of its</div><div>discretion. </div><div>10. Now, so far as the reliance placed upon</div><div>the decision of this Court in the case of Sridevi</div><div>Datla vs. Union of India reported in (2021) 5</div><div>SCC 321 relied upon on behalf of the appellant</div><div>is concerned, at the outset it is required to be</div><div>noted that in the said decision, this Court has</div><div>not noticed the decision in the case of Assam</div><div>Urban (Supra) and there is no discussion on</div><div>distinction between “prescribed period” and the</div><div>“discretionary condonable period”. On the</div><div>other hand, the binding decision of this Court</div><div>in the case of Assam Urban (Supra) is directly</div><div>on point. </div><div>11. In view of the above and for the reasons stated</div><div>above, applying the law laid down by this</div><div>Court in the case of Assam Urban (Supra), it</div><div>cannot be said that the High Court and the</div><div>learned III Additional District & Sessions</div><div>Judge, Vijaypur have committed any error in</div><div>Civil Appeal No. 6810 of 2022 Page 43 of 44</div><div>refusing to condone the delay caused in</div><div>preferring application under Section 34 of the</div><div>Arbitration and Conciliation Act, 1996 which</div><div>was beyond the period prescribed under</div><div>Section 34(3) of the Arbitration and</div><div>Conciliation Act, 1996. Under the</div><div>circumstances, the present Appeal deserves to</div><div>be dismissed and is, accordingly, dismissed. In</div><div>the facts and circumstances of the case, there</div><div>shall be no order as to costs. </div><div>…………………………………J.</div><div> (M. R. SHAH)</div><div>…………………………………J.</div><div> (KRISHNA MURARI)</div><div>New Delhi, </div><div>April 10, 2023</div><div>Civil Appeal No. 6810 of 2022 Page 44 of 44</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-58043301505462765932023-04-10T06:19:00.001-07:002023-04-10T06:19:06.830-07:00Rajalakshmi Versus The Special Tahsildar (LA) Koyilandy & Another<div>Rajalakshmi Versus The Special Tahsildar (LA) Koyilandy & Another </div><div><br /></div>
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<p style="text-align: justify;"><b><a href="https://www.indianconstitution.in/p/landmark-judgments.html">Landmark Cases</a> of India / </b><span style="text-align: left;"><b><a href="https://www.indianconstitution.in/2021/09/100-100-landmark-cases-of-supreme-court.html">सुप्रीम कोर्ट के ऐतिहासिक फैसले</a></b></span></p>
<div><br /></div><div><br /></div><div>REPORTABLE</div><div>IN THE SUPREME COURT OF INDIA</div><div>CIVIL APPELLATE JURISDICTION</div><div>CIVIL APPEAL NO. 2363 OF 2023</div><div>(Arising from SLP(Civil|) No. 15698/2021)</div><div>Rajalakshmi …Appellant</div><div>Versus</div><div>The Special Tahsildar (LA) Koyilandy & Another</div><div>…Respondents</div><div>WITH</div><div>CIVIL APPEAL NOS.2347-2362 OF 2023</div><div>(Arising from S.L.P.(Civil) Nos.6574-6589/2023 @ Diary</div><div>No. 15033/2021</div><div>CIVIL APPEAL NO. 2368 OF 2023</div><div>(Arising from S.L.P.(Civil) No.6605/2023 @</div><div>Diary No. 42974/201</div><div>CIVIL APPEAL NOS.2366-2367 OF 2023</div><div>(Arising from S.L.P.(Civil) Nos.6597-6598/2023 @ Diary</div><div>No. 35917/2022</div><div>J U D G M E N T</div><div>M.R. SHAH, J.</div><div>1. As common question of law and facts arise in these</div><div>appeals, all these appeals are decided and disposed of</div><div>together by this common judgment and order.</div><div>Civil Appeal No. 2363/2023 etc. Page 1 of 8</div><div>2. Feeling aggrieved and dissatisfied with the</div><div>impugned judgments and orders dated</div><div>30.05.2018/28.05.2018/10.08.2022 passed by the High</div><div>Court of Kerala at Ernakulam in Land Acquisition Appeal</div><div>No. 359/2017 and other allied appeals and cross</div><div>objections, by which the High Court has determined and</div><div>awarded the compensation for the lands acquired at the</div><div>rate of Rs.1,35,000/- per cent, the original</div><div>landowners/claimants have preferred the present appeals.</div><div>3. In all these appeals, the lands in question came to</div><div>be acquired for the purpose of setting up of an IT Park at</div><div>Kozhikode. Notification/s under Section 4 of the Land</div><div>Acquisition Act, 1894 (hereinafter referred to as the ‘Act’)</div><div>came to be issued on 21.08.2009. The Land Acquisition</div><div>Officer declared the award and awarded compensation at</div><div>the rate of Rs. 16,294/- per cent for wet land; Rs.27,807/-</div><div>per cent for garden land without road access; and</div><div>Rs.45,897/- per cent for garden land having road access.</div><div>However, the Reference Court enhanced the amount of</div><div>compensation to Rs. 2,00,000/- per cent for the garden</div><div>land adjacent to the road and Rs.1,75,000/- per cent for</div><div>the garden land not having the access to the road.</div><div>However, the High Court by the impugned common</div><div>judgment and order has determined and awarded</div><div>Civil Appeal No. 2363/2023 etc. Page 2 of 8</div><div>compensation to Rs. 1,35,000/- per cent, giving 35% rise</div><div>to the negotiated price at which the other lands came to</div><div>be acquired.</div><div>3.1 Insofar as Civil Appeal arising from Special Leave</div><div>Petition No. 15698/2021 is concerned, as noted</div><div>hereinabove, with respect to the very notification dated</div><div>21.08.2009, the Land Acquisition Officer awarded</div><div>compensation at the rate of Rs.45,897/- per cent. The</div><div>Reference Court enhanced the amount of compensation</div><div>to Rs. 3,00,000/- per cent. However, in an appeal</div><div>preferred by the acquisition body/beneficiary, by the</div><div>impugned judgment and order, the High Court has</div><div>awarded and determined the compensation at the rate of</div><div>Rs. 1,35,000/- per cent, relying upon the common</div><div>judgment and order dated 28.05.2018, which is the</div><div>subject matter of the present appeals as above.</div><div>4. Learned Senior Advocates appearing on behalf of</div><div>the respective landowners/original claimants have</div><div>vehemently submitted that in the facts and circumstances</div><div>of the case, the High Court has materially erred in</div><div>awarding compensation at the rate of Rs. 1,35,000/- per</div><div>cent.</div><div>4.1 It is vehemently submitted by the learned senior</div><div>counsel that the lands in question were the garden lands</div><div>Civil Appeal No. 2363/2023 etc. Page 3 of 8</div><div>and were having the access to the road and were situated</div><div>in a prime location and which were nearer to the IT Park</div><div>and therefore the High Court has material erred in</div><div>awarding compensation at the rate of Rs. 1,35,000/- per</div><div>cent only.</div><div>4.2 It is next submitted that the claimants relied upon</div><div>the sale exemplar in which the land nearer to the lands</div><div>acquired came to be sold at Rs. 4,00,000/- per cent. It is</div><div>submitted that the High Court has materially erred in</div><div>discarding the same by observing that the price</div><div>mentioned in the sale exemplar is artificial and on the</div><div>higher side.</div><div>4.3 Learned senior counsel appearing on behalf of the</div><div>respective landowners/original claimants have further</div><div>submitted that in any case the High Court has materially</div><div>erred in giving only 35% rise to the negotiated price. It is</div><div>submitted that merely because the other landowners</div><div>accepted the compensation at Rs. 1,00,000/- per cent as</div><div>they might be satisfied with that compensation, cannot be</div><div>a ground to take into consideration the negotiated price of</div><div>Rs. 1,00,000/- per cent.</div><div>4.4 Learned senior counsel appearing on behalf of the</div><div>appellants have taken us to the observations made by the</div><div>Reference Court on the location of the lands acquired.</div><div>Civil Appeal No. 2363/2023 etc. Page 4 of 8</div><div>4.5 Making above submissions, it is prayed to enhance</div><div>the amount of compensation.</div><div>5. While opposing the present appeals, Shri V.</div><div>Chitambaresh, learned Senior Advocate and Mr. C.K.</div><div>Sasi, learned counsel appearing on behalf of the</div><div>beneficiary/acquiring body have vehemently submitted</div><div>that most of the landowners as such have accepted the</div><div>negotiated compensation of Rs. 1,00,000/- per cent. It is</div><div>submitted that therefore the High Court has not committed</div><div>any error in determining the compensation taking into</div><div>consideration the negotiated price accepted by most of</div><div>the landowners.</div><div>5.1 It is submitted that so far as the sale exemplar relied</div><div>upon on behalf of the appellants is concerned, it is</div><div>submitted that as the same property was sold for</div><div>commercial purpose, by giving cogent reasons the High</div><div>Court has rightly discarded the same. It is submitted that</div><div>so far as the other sale exemplars are concerned, they</div><div>were post-acquisition and therefore the same are rightly</div><div>discarded by the High Court.</div><div>5.2 Making above submissions, it is prayed to dismiss</div><div>the present appeals.</div><div>6. We have heard learned counsel for the respective</div><div>parties at length.</div><div>Civil Appeal No. 2363/2023 etc. Page 5 of 8</div><div>At the outset, it is required to be noted that by the</div><div>impugned common judgment and order the High Court</div><div>has determined the compensation at the rate of Rs.</div><div>1,35,000/- per cent considering the negotiated price at Rs.</div><div>1,00,000/- per cent and giving further 35% rise. It is</div><div>required to be noted that out of the total acquisition, with</div><div>respect to 145 landowners for 28.89 acres, the requiring</div><div>authority purchased the land on the basis of negotiations</div><div>at the sale consideration of Rs. 1,00,000/- per cent.</div><div>Therefore, many landowners accepted the compensation</div><div>at negotiated price of Rs. 1,00,000/- per cent. However,</div><div>the present landowners were not satisfied and therefore at</div><div>their instance the references were made under section 18</div><div>of the Act. Therefore, as such, the High Court rightly took</div><div>into consideration the negotiated price for which the other</div><div>various landowners sold their land for the very project for</div><div>a sale consideration of Rs. 1,00,000/- per cent. It is true</div><div>that the landowners who are aggrieved by the amount of</div><div>compensation determined by the Land Acquisition Officer</div><div>are not bound by the negotiated price agreed by the other</div><div>landowners, however, the same can be said to be a</div><div>relevant consideration for determining the compensation</div><div>in the present case.</div><div>Civil Appeal No. 2363/2023 etc. Page 6 of 8</div><div>7. Now so far as the reliance placed upon the sale</div><div>exemplar relied upon on behalf of the landowners is</div><div>concerned, by giving cogent reasons, the High Court has</div><div>discarded the same by observing that the price mentioned</div><div>in the said sale exemplar is artificial and exorbitant. It is</div><div>required to be noted that the land with respect to sale</div><div>exemplar was sold for a commercial purpose, namely,</div><div>Mall. Therefore, in the facts and circumstances of the</div><div>case, the High Court has rightly discarded the same. So</div><div>far as the other sale exemplars are concerned, the same</div><div>are post-acquisition and therefore also the High Court has</div><div>rightly discarded the same.</div><div>8. From the impugned judgment(s) and order(s)</div><div>passed by the High Court, it appears that the High Court</div><div>has determined and awarded compensation at Rs.</div><div>1,35,000/- per cent by giving 35% rise to the negotiated</div><div>price of Rs. 1,00,000/- per cent. However, taking into</div><div>consideration the location of the lands; the lands being</div><div>garden lands having road access and Thondayad junction</div><div>is about 2 kilometres away from the acquired land, we are</div><div>of the opinion that granting 35% rise to the negotiated</div><div>price of Rs. 1,00,000/- per cent can be said to be on a</div><div>lower side. In our view, the claimants/landowners are</div><div>entitled to just compensation. Therefore, in the facts and</div><div>Civil Appeal No. 2363/2023 etc. Page 7 of 8</div><div>circumstances of the case and looking to the location of</div><div>the acquired lands, we are of the opinion that if 60% rise</div><div>to the negotiated price is given, the same can be said to</div><div>be just compensation and which can be said to be a fair</div><div>compensation.</div><div>9. In view of the above and for the reasons stated</div><div>above, all these appeals succeed in part. The impugned</div><div>judgment/s and order/s passed by the High Court are</div><div>hereby modified to the extent awarding compensation for</div><div>the lands acquired at the rate of Rs. 1,60,000/- per cent,</div><div>instead of Rs. 1,35,000/- per cent as awarded by the High</div><div>Court. It goes without saying that the claimants shall be</div><div>entitled to all the statutory benefits including interest which</div><div>may be available under the Act, 1894 on the enhanced</div><div>amount of compensation. The acquiring body is hereby</div><div>directed to deposit the enhanced amount of compensation</div><div>as above with the Reference Court within a period of six</div><div>weeks from today and on such deposit the original</div><div>claimants shall be permitted to withdraw the same.</div><div>10. The present appeals stand disposed of in the above</div><div>terms. No costs.</div><div>………………………………..J.</div><div>[M.R. SHAH]</div><div>NEW DELHI; ………………………………..J.</div><div>APRIL 10, 2023. [C.T. RAVIKUMAR]</div><div>Civil Appeal No. 2363/2023 etc. Page 8 of 8</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-32333348979483867102023-04-10T06:16:00.005-07:002023-04-10T06:16:54.270-07:00COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE TAX Versus M/S SUZLON ENERGY LTD.<div>COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE TAX Versus M/S SUZLON ENERGY LTD. </div><div><br /></div>
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<p style="text-align: justify;"><b><a href="https://www.indianconstitution.in/p/landmark-judgments.html">Landmark Cases</a> of India / </b><span style="text-align: left;"><b><a href="https://www.indianconstitution.in/2021/09/100-100-landmark-cases-of-supreme-court.html">सुप्रीम कोर्ट के ऐतिहासिक फैसले</a></b></span></p>
<div><br /></div><div><br /></div><div>REPORTABLE</div><div>IN THE SUPREME COURT OF INDIA</div><div>CIVIL APPELLATE JURISDICTION</div><div>CIVIL APPEAL NOS.11400-11401/2018</div><div>COMMISSIONER OF CUSTOMS, CENTRAL</div><div>EXCISE & SERVICE TAX …APPELLANT</div><div>Versus</div><div>M/S SUZLON ENERGY LTD. …RESPONDENT</div><div>J U D G M E N T</div><div>M.R. SHAH, J.</div><div>1. Feeling aggrieved and dissatisfied with the</div><div>impugned judgment and order dated 02.05.2018 passed</div><div>by the Customs, Excise and Service Tax Appellate</div><div>Tribunal, West Zonal Bench at Mumbai (hereinafter</div><div>referred to as the ‘CESTAT’) in Appeal Nos. ST/87589 &</div><div>87590/2013, by which the CESTAT has allowed the said</div><div>appeals preferred by the respondent – M/s Suzlon Energy</div><div>Civil Appeal Nos.11400-11401/2018 Page 1 of 21</div><div>Limited (hereinafter referred to as the ‘respondent’) and</div><div>has held that “Engineering Design & Drawings” of various</div><div>models imported by the respondent for the purpose of</div><div>manufacturing of Wind Turbine Generator (for short,</div><div>‘WTG’) are not leviable to service tax under the category</div><div>of “Design Services” as defined under Section 65(35b)</div><div>read with Section 65(105)(zzzzd) of the Finance Act, 1994</div><div>during the period June, 2007 to September, 2010, the</div><div>Revenue has preferred the present appeals.</div><div>2. That the respondent herein was providing various</div><div>taxable services. The respondent was also in the</div><div>manufacture of WTG. It has three subsidiary companies</div><div>situated in Germany and Netherlands with whom product</div><div>development and purchase agreement had been entered</div><div>into.</div><div>2.1 The respondent had entered into an agreement</div><div>dated 01.04.2007 (w.e.f. 01.01.2007) with M/s Suzlon</div><div>Energy GmbH, Germany, a sister concern for the product</div><div>development and purchase agreement to be used</div><div>exclusively for manufacturing of WTG in the territory of</div><div>India. The products were exclusively defined in para 1.10</div><div>of the said agreement.</div><div>2.2 The respondent, while importing these designs filed</div><div>Bill of Entry with the Custom authorities and classified the</div><div>Civil Appeal Nos.11400-11401/2018 Page 2 of 21</div><div>same as “Paper” under Chapter Sub-heading No.</div><div>49119920 of the Customs Tariff and claimed benefit of ‘Nil’</div><div>rate of customs duty under Notification No. 021/2002 for</div><div>BCD and Notification No. 020/2006 for CVD. That</div><div>respondent claimed that since the designs and drawings</div><div>received by it vis customs route by filing the Bill of Entry</div><div>were “goods” and not “services”, it was not required to pay</div><div>the service tax.</div><div>2.3 During the course of audit, it was noticed that the</div><div>respondent had not paid service tax on “Engineering</div><div>Design & Drawings” of various models, used in the</div><div>manufacturing of WTG, which was classifiable under the</div><div>category of “Design Services” for the period from June,</div><div>2007 to September, 2010.</div><div>2.4 The appellant herein – Commissioner of Customs,</div><div>Central Excise and Service Tax, Pune issued a show</div><div>cause notice dated 15.12.2001 to the respondent calling</div><div>upon it to show cause as to why the service tax to the</div><div>tune of Rs.18,42,99,652/- on the value of taxable services</div><div>provided by it under the provisions of Section 73 of</div><div>Chapter V of the Finance Act and cess under Section 85</div><div>of Chapter VI of the Finance Act be not demanded. The</div><div>respondent was also called upon to pay the interest</div><div>leviable under Section 75 and penalty under Section 76</div><div>Civil Appeal Nos.11400-11401/2018 Page 3 of 21</div><div>and 78 of the Finance Act. For the subsequent period ,</div><div>i.e., October, 2010 to September, 2011, another show</div><div>cause notice was issued on 20.04.2012 demanding</div><div>service tax of Rs.3,36,28,515/- on the value of “design</div><div>service” from M/s SEG and M/s Suzlon Blade Technology,</div><div>Netherlands.</div><div>2.5 Vide Order-in-original dated 25.03.2012, the</div><div>Commissioner – appellant herein confirmed the demands</div><div>made in the show cause notices as provider of “design</div><div>services” taxable under Section 65(105)(zzzzd) and in</div><div>accordance with the definition of the services in Section</div><div>65(35b) of the Finance Act, 1994. The Commissioner</div><div>also levied interest as well as the penalty.</div><div>2.6 Aggrieved by the Order-in-original passed by the</div><div>Commissioner confirming the demands of service tax and</div><div>also levying the interest and penalty, the respondent filed</div><div>appeals before the CESTAT. By the impugned common</div><div>order, the CESTAT has allowed the said appeals, relying</div><div>upon its earlier decision in the case of Sojitz Corporation</div><div>v. Commissioner of Service Tax, New Delhi, reported</div><div>in 2009 (14) STR 642 (Tri. Delhi) and has held that the</div><div>said design and drawings are ‘goods’ and not ‘service’.</div><div>The CESTAT has also observed and held that the taxation</div><div>of goods and that of services are mutually and explicitly</div><div>Civil Appeal Nos.11400-11401/2018 Page 4 of 21</div><div>conceived levies, and therefore the same activity cannot</div><div>be taxed as goods and as services. Consequently, the</div><div>CESTAT has set aside the Order-in-original on the ground</div><div>that “drawing and design” are to be treated as goods and</div><div>therefore it cannot be treated as service.</div><div>2.7 Feeling aggrieved and dissatisfied with the</div><div>impugned common order passed by the CESTAT, the</div><div>Revenue has preferred the present appeals.</div><div>3. Shri N. Venkataraman, learned Additional Solicitor</div><div>General of India appearing on behalf of the Revenue has</div><div>submitted that the substantial question of law arises for</div><div>the consideration of this Court is, “whether “Engineering</div><div>Design & Drawings” of various models imported by the</div><div>respondent for the purpose of manufacturing of WTG are</div><div>leviable to service tax under the category of “Design</div><div>Services” as defined under section 65(35b) r/w section</div><div>65(105)(zzzzd) of the Finance Act, 1994 during the period</div><div>June, 2007 to September, 2010?</div><div>3.1 Shri N. Venkataraman, learned ASG has submitted</div><div>that the contentions of the respondent that any intellectual</div><div>property put in a media at all times would only get</div><div>classified as ‘goods’ and never as ‘services’ may not be</div><div>the correct statement of law. It is submitted that merely</div><div>because the intellectual property put in a media, it would</div><div>Civil Appeal Nos.11400-11401/2018 Page 5 of 21</div><div>not per se make them goods. It would depend on whether</div><div>the contracting parties have understood it as a transfer or</div><div>a sale of goods. It is submitted that importation of a set of</div><div>tailor made or readymade drawings will constitute a sale</div><div>of goods, whereas if a person engages a painter to draw a</div><div>picture of his choice and to his specifications and the</div><div>delivery of the painting, even though on a canvas duly</div><div>framed, may only constitute to a service, since the painter</div><div>has engaged his entire intellectual effort in drawing the</div><div>painting for a particular customer and to his specifications</div><div>and as he progresses with the painting, the same is for a</div><div>specific customer.</div><div>3.2 It is submitted that this can also happen in the case</div><div>of “designs & drawings”. It is submitted that a set of tailor</div><div>made drawings and designs or readymade drawings and</div><div>designs would constitute a distinct clause when compared</div><div>to preparation of drawings and designs under a contract</div><div>of service for a specific customer to suit his specifications.</div><div>3.3 Shri N. Venkataraman, learned ASG has heavily</div><div>relied upon the decision of this Court in the case of BSNL</div><div>v. Union of India, reported in (2006) 3 SCC 1 (paras 44</div><div>& 45), in support of his submission on the distinction</div><div>between sale of goods and a contract of service. On the</div><div>decision of this Court in the case of BSNL (supra) and</div><div>Civil Appeal Nos.11400-11401/2018 Page 6 of 21</div><div>the distinction between sale of goods and a contract of</div><div>service, Shri N. Venkataraman has made the following</div><div>submissions:</div><div>a) it held that sale in the conventional sense would</div><div>mean the Gannon Dunkerly test and, deemed sale</div><div>involving both goods and services would be limited only</div><div>to a work contract and food contract;</div><div>b) It made it clear that Article 366(29A) does not give a</div><div>license to assume that a transaction is a sale and then</div><div>to look around for what could be the goods. This would</div><div>be an incorrect approach since the expression goods</div><div>had not been altered by the 46th amendment and the</div><div>ingredients of sale continues to have the same</div><div>definition;</div><div>c) However, this does not mean that the content of the</div><div>concepts remain static, and the Courts must move with</div><div>times;</div><div>d) It proceeded to hold that Article 366(29A) does not</div><div>seek to cover hospital services, lawyer services and</div><div>other professional services, where during the course of</div><div>rendering such services, there may be a transfer of</div><div>goods;</div><div>Civil Appeal Nos.11400-11401/2018 Page 7 of 21</div><div>e) Treatment of a patient in a hospital and</div><div>administration of pills in the course of a treatment would</div><div>not tantamount to sale;</div><div>f) When a doctor writes out and hands over a</div><div>prescription or a lawyer drafts a document and delivers</div><div>it to his/her client, strictly speaking, with a payment of</div><div>fees, consideration does not pass from the patient or</div><div>client to the doctor or lawyer for the documents in both</div><div>the cases;</div><div>g) However, these are mere services and do not</div><div>involve a sale for the purposes of Entry 54 List 2;</div><div>h) The reason is that ultimately one has to apply the</div><div>Gannon Dunkerly test. If there is an instrument of</div><div>contract which may be composite in form, in any case</div><div>other than the exceptions in Article 366(29A), unless</div><div>the transaction in truth represents two distinct and</div><div>separate contracts and is discernible as such, then the</div><div>State would not have the power to separate the</div><div>agreement to sell from the agreement to render service</div><div>and impose tax on sale;</div><div>i) The test, therefore, for service contracts, other than</div><div>the two contracts falling under Article 366(29A), would</div><div>be ‘did the parties have in mine or intend separate</div><div>rights arising out of the sale of goods? If there was no</div><div>Civil Appeal Nos.11400-11401/2018 Page 8 of 21</div><div>such intention, there is no sale even if the contract</div><div>could be disintegrated.’; and</div><div>j) The test for deciding whether a contract falls into</div><div>one category or another is, as what is the substance of</div><div>the contract otherwise called, the dominant nature test.</div><div>3.4 It is submitted that therefore what is required to be</div><div>considered is, did the contracting parties intend transfer of</div><div>both goods and services, either separately or in an</div><div>indivisible manner or in a composite manner.</div><div>3.5 Shri N. Venkataraman, learned ASG has also</div><div>submitted the following illustrations in support of his</div><div>submission that the “Engineering Design & Drawings” of</div><div>various models imported by the respondent for the</div><div>purpose of manufacture of WTG are leviable to service</div><div>tax and cannot be taxed as goods:</div><div>i) If a contracting parties A and B agree to the</div><div>purchase of a huge boiler for erection, installation and</div><div>commission in a factory, the intention of the contracting</div><div>parties would envisage the sale of a boiler as goods</div><div>and a rendition of erection, installation and</div><div>commissioning as services. This contract can be either</div><div>divisible, indivisible or composite. Whatever may be</div><div>the nature of the contract, the intending parties have</div><div>Civil Appeal Nos.11400-11401/2018 Page 9 of 21</div><div>contracted for both the sale of goods and the rendition</div><div>of service.</div><div>ii) A patient is under medical treatment at a hospital</div><div>and the doctor had advised for a heart surgery and</div><div>insertion of a stent. Here again, it involves two</div><div>elements. The transfer of the stent from the hospital into</div><div>the body of the patient and the rendition of medical</div><div>services by the doctor through the hospital. Even</div><div>though it involves both goods (stends) and services</div><div>(medical services/hospital services), the contracting</div><div>parties, namely, the patient and the hospital, do not</div><div>intend to buy and sell a stent and also a rendition of</div><div>medical services as 2 items of sale and service. The</div><div>contract is essentially for the rendition of medical</div><div>services and in the course of rendition, based on the</div><div>advice of the doctor, a stent is inserted into the body of</div><div>the patient.</div><div>3.6 Making above submissions, it is prayed to allow the</div><div>present appeals.</div><div>4. Shri V. Sridharan, learned senior counsel appearing</div><div>on behalf of the respondent has submitted that the precise</div><div>question involved in the present appeal is, “whether</div><div>service tax can be levied on pure sale (not deemed sale)</div><div>Civil Appeal Nos.11400-11401/2018 Page 10 of 21</div><div>of customises drawings/designs contained in a medium</div><div>prepared as per the specifications given by the customer.”</div><div>4.1 It is submitted that as per the settled position of law,</div><div>supply of goods as per specifications given by the</div><div>customer is also treated as sale of goods.</div><div>4.2 It is submitted that the first question is, whether</div><div>supply of goods as per specifications given by the</div><div>customer is a contract of sale of goods or merely a</div><div>contract for work on labour. It is submitted that in the</div><div>case of Hindustan Shipyard Ltd. v. State of A.P.,</div><div>reported in (2000) 6 SCC 579, it is held that if the thing to</div><div>be delivered has any individual existence before the</div><div>delivery as the sole property of the party who is to deliver</div><div>it, then it is a sale. Further, if the bulk of material used in</div><div>construction belongs to the manufacturer who sells the</div><div>end product for a price, then it is a strong pointer to the</div><div>conclusion that the contract is in substance one for the</div><div>sale of goods and not one for labour.</div><div>4.3 Learned senior counsel appearing on behalf of the</div><div>respondent has heavily relied upon the decision of this</div><div>Court in the case of Associated Cement Companies</div><div>Ltd. v. Commissioner of Customs, reported in (2001) 4</div><div>SCC 593. It is submitted that in the said decision, this</div><div>Court has held that any media which contain drawings or</div><div>Civil Appeal Nos.11400-11401/2018 Page 11 of 21</div><div>designs would be regarded as goods under the provisions</div><div>of the Customs Act. It is observed that these items are</div><div>movable goods and would be covered by Section 2(22)(e)</div><div>of the Customs Act. It is observed and held that the fact</div><div>that the technology or ideas is tailormade would not make</div><div>any difference.</div><div>4.4 It is submitted by Shri V. Sridharan, learned senior</div><div>counsel appearing on behalf of the respondent that it may</div><div>be true that the decision of this Court in the case of</div><div>Associated Cement Companies Ltd. (supra) may not</div><div>be an authority for the proposition that service tax cannot</div><div>be levied on pure sale of goods, the said decision is</div><div>certainly an authority for the proposition that designs on a</div><div>medium will be treated as goods under the natural</div><div>definition of goods. It is submitted that the said decision is</div><div>also an authority for the proposition that the amount paid</div><div>by the importer to the original supplier is nothing but price</div><div>for sale of such goods.</div><div>4.5 Shri V. Sridharan, learned senior counsel has also</div><div>relied upon the Constitution Bench decision of this Court</div><div>in the case of Tata Consultancy Services v. State of</div><div>A.P., reported in (2005) 1 SCC 308. It is submitted that</div><div>in the said decision, the question was, as to whether</div><div>canned software soled by the appellants can be termed to</div><div>Civil Appeal Nos.11400-11401/2018 Page 12 of 21</div><div>be “goods” and as such assessable to sales tax under the</div><div>Andhra Pradesh General Sales Tax Act, 1957. It is</div><div>submitted that in the said decision, this Court affirmed the</div><div>decision in the case of Associated Cement Companies</div><div>Ltd. (supra) and held that intellectual property, once it is</div><div>put on to a media, whether it be in the form of books or</div><div>canvas (in case of painting) or computer discs or</div><div>cassettes and marketed would become “goods.”</div><div>4.6 It is further submitted that the intent of service tax</div><div>legislation is not to levy service tax on sale of goods. It is</div><div>submitted that sales tax is levied on sale of goods</div><div>whereas the service tax is levied on provision of service.</div><div>It is submitted that therefore a transfer of goods for a price</div><div>cannot be subject to service tax.</div><div>4.7 It is submitted that it is true that different aspects of</div><div>a transaction can be taxed through separate provisions.</div><div>The aspect theory permits taxation of two different</div><div>aspects or features of a transaction. For instance, in a</div><div>catering contract, supply of food was subject to value</div><div>added tax and the service aspect was subject to service</div><div>tax. However, in the case of BSNL (supra), this Court</div><div>has observed that the aspect theory does not allow the</div><div>value of goods to be included in services and vice versa.</div><div>Civil Appeal Nos.11400-11401/2018 Page 13 of 21</div><div>Reliance is placed on the observations made in para 88 of</div><div>the said judgment.</div><div>4.8 It is further submitted by Shri V. Sridharan, learned</div><div>senior counsel appearing on behalf of the respondent that</div><div>before the CESTAT, the respondent raised a specific</div><div>ground that the services (if any) rendered by a foreign</div><div>entity will not fall within the purview of “design services”.</div><div>The respondent also raised a specific ground that the</div><div>extended period of limitation cannot be invoked.</div><div>However, though the said submissions have been noted</div><div>be the CESTAT, the CESTAT has not dealt with those</div><div>contentions and therefore it is prayed that the matter may</div><div>be remanded to the CESTAT to decide all these</div><div>questions.</div><div>5. We have heard learned counsel for the respective</div><div>parties at length.</div><div>The issue to be decided in the present appeals is</div><div>“whether activity of import of “Engineering Design &</div><div>Drawings” from the sister companies by the notice during</div><div>the period under dispute i.e., June, 2007 to September,</div><div>2010 is classifiable under taxable category “design</div><div>services” under section 65(35b) read with Section 65(105)</div><div>(zzzzd) of the Finance Act, 1994 .</div><div>Civil Appeal Nos.11400-11401/2018 Page 14 of 21</div><div>5.1 While considering the aforesaid issue, the definition</div><div>of “design services” under the Finance Act, 1994, as it</div><div>stood during the impugned period, is required to be</div><div>considered, which reads as under:</div><div>SECTION 65. Definitions. -In this chapter, unless the context</div><div>otherwise requires,</div><div>……….</div><div>(36b) design services" includes services provided in relation</div><div>to designing of furniture, consumer products, industrial</div><div>products, packages, logos, graphics, websites and corporate</div><div>identity designing and production of three dimensional</div><div>models:</div><div>……….</div><div>(105) (zzzzd) "taxable service" means any service provided</div><div>or to be provided,</div><div>(zzzzd) to any person, by any other person in relation to</div><div>design services, but does not include service provided by-</div><div>(i) an interior decorator referred to in sub- clause (q);</div><div>and</div><div>(ii) a fashion designer in relation to fashion designing</div><div>referred to in sub-clause (zv):</div><div>and the term "service provider" shall be construed accordingly.”</div><div>Civil Appeal Nos.11400-11401/2018 Page 15 of 21</div><div>Thus, it can be seen that the definition of “design</div><div>services” is a wide and conclusive one, specifically</div><div>excluding only fashion design and interior designing,</div><div>which were already taxable under separate taxable</div><div>category.</div><div>6. In the present case, the respondent was engaged in</div><div>manufacture of Wind Turbine Generator (WTG). It</div><div>entered into ‘product development and purchase</div><div>agreement’ with three of its sister companies. Relevant</div><div>clauses of the agreement, more particularly which defined</div><div>the ‘product’ read as under:</div><div>1.10.1 'Design and Development' of all models of</div><div>rated capacity geared WTG together with all</div><div>related and pertinent components and therein</div><div>required;</div><div>1.10.2 'Design and Development' of 'Suzlon Flexislip</div><div>System' together with all related and pertinent</div><div>components and therein required;</div><div>1.10.3 All and any products that is developed by M/s</div><div>SEG conceived (whether or not actually</div><div>conceived during regular business hours),</div><div>discovered, or made by M/s SEG and its</div><div>agents and employees during the course of</div><div>performing its obligations under the</div><div>Agreement;</div><div>Civil Appeal Nos.11400-11401/2018 Page 16 of 21</div><div>1.10.4 Documentation including material and</div><div>documents containing studies planning</div><div>activities, manufacturing process details in</div><div>respect of above.</div><div>1.10.5 All modifications made to the above, from time</div><div>to time, and all other improvements developed</div><div>and incorporated within the above.</div><div>1.10.6 Intellectual property and intellectual property</div><div>rights relating thereto in so far it belongs to</div><div>German Inventions Law.</div><div>7. At this stage, it is required to be noted that the said</div><div>designs were to be exclusively used by the respondent in</div><div>the territory of India and it was a tailormade design. The</div><div>respondent engaged the sister concern M/s SEG for the</div><div>activity of “Engineering Design & Drawings” used in</div><div>manufacturing of WTG, that was reduced as blue print on</div><div>paper and delivered to the respondent on the same</div><div>medium. Such “designs” were subjected to the service</div><div>tax even as per the clarification by the Board dated</div><div>18.03.2011 on the issue of applicability of indirect taxes</div><div>on packaged software. Therefore, as such, the</div><div>respondent was liable to pay service tax on the “design</div><div>services” received from abroad under reverse charge. It</div><div>was also found that M/s SEG was a related unit, i.e.,</div><div>Civil Appeal Nos.11400-11401/2018 Page 17 of 21</div><div>subsidiary of the assessee and the amount received for</div><div>service by M/s SEG from the assessee-respondent for the</div><div>said “Engineering design & drawings” services therefore</div><div>was liable to service tax under reverse charge in terms of</div><div>the concept of ‘associated enterprise’.</div><div>8. Despite the above, M/s SEG raised the invoice/bill</div><div>on the assessee treating it as ‘paper’. However, when the</div><div>said bill of entry was presented treating the same as</div><div>‘paper’ for which the duty payable was ‘Nil’. Therefore,</div><div>neither any custom duty was paid due to exemption from</div><div>payment of duty treating it as ‘paper’ nor the service tax</div><div>was paid. By a detailed judgment and order, the</div><div>Commissioner held that the respondent was liable to pay</div><div>the service tax under taxable category ‘”design services”.</div><div>However, by the impugned judgment and order, the</div><div>CESTAT has held that the respondent is not liable to pay</div><div>the service tax under “design services” under the Finance</div><div>Act, 1994 mainly on the ground that the custom authority</div><div>considered the same as ‘goods’ and therefore the same</div><div>activity cannot be taxed as ‘goods’ and ‘services’. The</div><div>aforesaid view is absolutely erroneous. As observed and</div><div>held by this Court in the case of BSNL (supra), there can</div><div>be two different taxes/levies under different heads by</div><div>applying the aspect theory. As per the settled position of</div><div>Civil Appeal Nos.11400-11401/2018 Page 18 of 21</div><div>law now, the same activity can be taxed as ‘goods’ and</div><div>‘services’ provided the contract is indivisible and on the</div><div>aspect of services there may be levy of service tax. The</div><div>aforesaid aspect has not at all been considered by the</div><div>CESTAT while passing the impugned judgment and order.</div><div>As observed hereinabove, the definition of “design</div><div>services” is very clear and it is wide enough to cover all</div><div>“design services.” Merely because “Engineering Design</div><div>& Drawings” prepared and supplied by sister company</div><div>were shown as ‘goods’ under the Customs Act and in the</div><div>bill of entry, by that itself cannot be a ground to take such</div><div>services out of the definition of “design services” under</div><div>the Finance Act, 1994.</div><div>9. Even otherwise, as observed by this Court in the</div><div>case of BSNL (supra), there is a distinction between the</div><div>sale of goods and a contract of service. What is relevant</div><div>is the intention of the contracting parties and whether the</div><div>contracting parties intend transfer of both goods and</div><div>services, either separately or in an indivisible manner or in</div><div>a composite manner. The issue is squarely covered by</div><div>the decision of this Court in the case of BSNL(supra)</div><div>against the assessee and in favour of the revenue.</div><div>Therefore, the view taken by the CESTAT that the same</div><div>activity cannot be taxed as goods and services is</div><div>Civil Appeal Nos.11400-11401/2018 Page 19 of 21</div><div>absolutely erroneous. Nothing further has been</div><div>discussed by the CESTAT, more particularly on the</div><div>findings recorded by the Commissioner recorded from</div><div>para 20 onwards. Under the circumstances, the</div><div>impugned judgment and order passed by the CESTAT</div><div>setting aside the levy of service tax is unsustainable and</div><div>the same deserves to be quashed and set aside.</div><div>However, at the same time, as other grounds raised</div><div>before the CESTAT, namely, “whether the services (if any)</div><div>rendered by a foreign entity will or will not fall within the</div><div>purview of “design services” and invocation of extended</div><div>period of limitation have not been considered by the</div><div>CESTAT and therefore learned counsel for the respondent</div><div>is justified in praying to remand the matter to CESTAT to</div><div>decide the aforesaid two grounds.</div><div>10. In view of the above and for the reasons stated</div><div>above, the impugned judgment and order passed by the</div><div>CESTAT holding that the respondent is not liable to pay</div><div>service tax as “design services” on importing various</div><div>models of “Engineering Design & Drawings” for the</div><div>purpose of manufacturing of Wind Turbine Generator</div><div>(WTG), as defined under Section 65(35b) r/w section</div><div>65(105)(zzzzd) of the Finance Act, 1994 is hereby</div><div>quashed and set aside. However, the matter is remitted</div><div>Civil Appeal Nos.11400-11401/2018 Page 20 of 21</div><div>back to the CESTAT to consider the grounds raised on</div><div>behalf of the respondent, namely, whether the services (if</div><div>any) rendered by a foreign entity will not fall within the</div><div>purview of “design services” and that the department was</div><div>not justified in invoking the extended period of limitation.</div><div>It is made clear that the matter is remitted back to</div><div>CESTAT to consider the aforesaid two grounds and none</div><div>other. Insofar as the issue of levy of service tax on the</div><div>“Engineering Design & Drawings” is concerned, the same</div><div>is decided in favour of the revenue and against the</div><div>assessee.</div><div>11. The instant appeals stand disposed of in terms of</div><div>the above. However, in the facts and circumstances of the</div><div>case, there shall be no order as to costs.</div><div>………………………………J.</div><div>[M.R. SHAH]</div><div>NEW DELHI; ………………………………J.</div><div>APRIL 10, 2023. [KRISHNA MURARI]</div><div><br /></div><div>Civil Appeal Nos.11400-11401/2018 Page 21 of 21</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-83062480389825704182023-04-10T06:14:00.006-07:002023-04-10T06:14:55.443-07:00M/s. Saraf Exports Versus Commissioner of Income Tax, Jaipur-III<div>M/s. Saraf Exports Versus Commissioner of Income Tax, Jaipur-III </div><div><br /></div>
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<div><br /></div><div><br /></div><div>REPORTABLE</div><div>IN THE SUPREME COURT OF INDIA</div><div>CIVIL APPELLATE JURISDICTION</div><div>CIVIL APPEAL NO. 4822 OF 2022</div><div>(@SLP (C) NO. 17539 OF 2016)</div><div>M/s. Saraf Exports …Appellant(s)</div><div>Versus</div><div>Commissioner of Income Tax,</div><div>Jaipur-III …Respondent(s)</div><div>J U D G M E N T</div><div>M.R. SHAH, J.</div><div>1. Feeling aggrieved and dissatisfied with the</div><div>impugned judgment and order passed by the High Court</div><div>of Judicature for Rajasthan at Jaipur dated 04.02.2016 in</div><div>D.B. Income Tax Appeal No. 7 of 2014 by which the High</div><div>Court has allowed the said appeal preferred by the</div><div>Revenue and has held that the assessee is not entitled to</div><div>the deduction under Section 80-IB of the Income Tax Act,</div><div>1961 (hereinafter referred to as “Act, 1961”) with respect</div><div>to the receipts under the Duty Drawback Scheme</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 1 of 36</div><div>(hereinafter referred to as “Duty Drawback”) and on</div><div>transfer of Duty Entitlement Pass Book Scheme</div><div>(hereinafter referred to as “DEPB”), the assessee has</div><div>preferred the present appeal.</div><div>2. The facts leading to the present appeal in nutshell</div><div>are as under:-</div><div>2.1 The assessee, a partnership firm, was engaged in</div><div>the business of manufacturing and exporting wooden</div><div>handicraft items. For the Assessment Year (A.Y.) 2008-</div><div>09, the assessee filed its return on 30.09.2008 declaring</div><div>its income as nil, claiming deduction of Rs. 70,197/- on</div><div>account of DEPB and of Rs. 76,27,636/- on account of</div><div>receipts under the Duty Drawback.</div><div>2.2 The assessee credited the receipts of the aforesaid</div><div>amounts into the Profit & Loss Account and claimed the</div><div>same as “Profit / gains of business / profession” under</div><div>Sections 28(iiic) and 28(iiib) of the Act, 1961. The</div><div>assessee was issued a notice under Section 143(2) of the</div><div>Act, 1961.</div><div>2.3 By order dated 24.11.2010, the Deputy</div><div>Commissioner disallowed the deductions as claimed. The</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 2 of 36</div><div>order of the Deputy Commissioner disallowing the</div><div>exemption as claimed, came to be upheld by the</div><div>Commissioner of Income Tax (Appeals). However, the</div><div>Income Tax Appellate Tribunal (ITAT) allowed the appeal</div><div>preferred by the assessee vide order dated 17.12.2013 by</div><div>inter alia observing that the decision of this Court in the</div><div>case of Liberty India Vs. Commissioner of Income Tax,</div><div>(2009) 9 SCC 328 : (2009) 317 ITR 218 (SC) can be said</div><div>to be per incuriam and allowed the deductions as claimed</div><div>on the receipts of amount under DEPB Scheme and Duty</div><div>Drawback Scheme.</div><div>2.4 By the impugned judgment and order and relying</div><div>upon the decision of this Court in the case of Liberty</div><div>India (supra) and the decision of this Court in the case of</div><div>Commissioner of Income Tax, Karnataka Vs. Sterling</div><div>Foods, Mangalore (1999) 4 SCC 98, the High Court has</div><div>allowed the appeal preferred by the Revenue and has</div><div>restored the order passed by the Deputy Commissioner</div><div>disallowing the deductions claimed under Section 80-IB of</div><div>the Act, 1961. The impugned judgment and order passed</div><div>by the High Court is the subject matter of the present</div><div>appeal.</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 3 of 36</div><div>3. Learned counsel appearing on behalf of the</div><div>assessee has heavily relied upon the decision of this</div><div>Court in the case of Commissioner of Income Tax Vs.</div><div>Meghalaya Steels Limited, (2016) 6 SCC 747 : (2016)</div><div>383 ITR 217 (SC),</div><div>3.1 It is submitted that the meaning of “derived from”</div><div>under Section 80-IB as laid down in Liberty India (supra)</div><div>has been widened by this Hon’ble Court in the case of</div><div>Meghalaya Steels Limited (supra).</div><div>3.2 It is further submitted that the conclusion of Liberty</div><div>India (supra) is based on the finding that “derived from”</div><div>under Section 80-IB requires a “first degree” connection</div><div>with the business of the industrial undertaking whereas</div><div>the source of DEPB / Duty Drawback are incentives given</div><div>under the Duty Exemption Remission Scheme / Section</div><div>75 of the Customs Act, 1962. That applying the test of</div><div>“first degree”, this Court in the case of Liberty India</div><div>(supra) held that receipts from DEPB / Duty Drawback</div><div>cannot be deducted under Section 80-IB.</div><div>3.3 It is next submitted that, however, subsequently, in</div><div>the case of Meghalaya Steels Limited (supra), the issue</div><div>before this Court was whether transport, interest and</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 4 of 36</div><div>power subsidy granted by the Government were entitled</div><div>to be deducted under Section 80-IB and this Hon’ble</div><div>Court has held that receipts of amount on the aforesaid</div><div>subsidies were entitled to be deducted under Section 80-</div><div>IB. It is submitted that in the said case, before this Court,</div><div>the Revenue relied upon Liberty India (supra) to contend</div><div>that the source of subsidies was the Government and</div><div>therefore, it could not be considered as having a direct</div><div>nexus / close connection with the business of the</div><div>assessee. It is submitted that, however, this Court has</div><div>rejected the said contention and held that the fact that the</div><div>Government is the “immediate source” of the subsidies is</div><div>not relevant so long as the subsidies reimbursed, wholly</div><div>or partially, costs actually incurred by the assessee in</div><div>manufacturing or selling of the products, because, the</div><div>profits or gains referred to in Section 80-IB means net</div><div>profit, i.e., profit derived after deduction of manufacturing</div><div>cost and selling cost.</div><div>3.4 It is contended that this Court specifically relied on</div><div>Section 28(iii)(b) and reiterated that any cash assistance</div><div>received from the Government against exports under any</div><div>Scheme is chargeable to income tax under the head of</div><div>“Profit or gains of business or profession”. That this Court</div><div>approved the decision of the Delhi High Court in the case</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 5 of 36</div><div>of Commissioner of Income Tax Vs. Dharam Pal Prem</div><div>Chand Ltd., (2009) 317 ITR 353 (Del) holding that the</div><div>refund of excise duty should not be excluded in arriving at</div><div>the profit derived from business for the purpose of</div><div>claiming deduction under Section 80-IB.</div><div>3.5 It is further contended that therefore, applying the</div><div>law laid down by this Court in the case of Meghalaya</div><div>Steels Limited (supra), the expression “Profit or gains</div><div>derived from any business” under Section 80-IB will</div><div>include any reimbursement of cost even if the immediate</div><div>reimbursement of such source is the Government or its</div><div>policy.</div><div>3.6 It is submitted by the learned counsel appearing on</div><div>behalf of the assessee that in the case of Topman</div><div>Exports Vs. Commissioner of Income Tax, Mumbai,</div><div>(2012) 3 SCC 593, it is observed and held that the DEPB /</div><div>Duty Drawback are relatable to cost of manufacture and</div><div>has a direct nexus with the cost of imports. That the said</div><div>view is in consonance with the view taken earlier in the</div><div>case of B. Desraj Vs. Commissioner of Income Tax,</div><div>Salem, (2010) 14 SCC 510, which held that the Duty</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 6 of 36</div><div>Drawback was in the nature of cash assistance under</div><div>Section 28(iii)(b).</div><div>3.7 It is next contended that in the case of Topman</div><div>Exports (supra), it is held that the DEPB is assistance</div><div>given by the Government to an exporter to pay customs</div><div>duty on its imports and it is receivable once exports are</div><div>made and an application under the DEPB Scheme is</div><div>made. That this Court has also held that DEPB also has</div><div>a cost element in so much as the cost of acquiring it is not</div><div>nil because it is acquired by paying customs duty on the</div><div>import content of the export product. It is submitted that</div><div>the decision of this Court in the case of Topman Exports</div><div>(supra) has been subsequently followed in the cases of</div><div>ACG Associated Capsules Private Limited Vs.</div><div>Commissioner of Income Tax, Central-IV, Mumbai</div><div>(2012) 3 SCC 321; Vikas Kalra Vs. Commissioner of</div><div>Income Tax – VII, New Delhi, (2012) 3 SCC 611 and</div><div>Nissan Export Vs. Commissioner of Income Tax,</div><div>(2014) 14 SCC 152.</div><div>3.8 It is submitted that, therefore, and in view of the</div><div>development of law in Meghalaya Steels Limited (supra)</div><div>and the Topman Exports (supra) DEPB / Duty Drawback</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 7 of 36</div><div>are “profits and gains derived from any business” within</div><div>the purview of Section 80-IB.</div><div>3.9 It is averred by the learned counsel appearing on</div><div>behalf of the assessee that various High Courts have</div><div>taken the view that the “immediate source” of the income</div><div>is not determinative.</div><div>4. Shri Balbir Singh, learned ASG while opposing the</div><div>present appeal has vehemently submitted that the issue</div><div>involved in the present appeal is squarely covered against</div><div>the assessee in view of the decision of this Court in the</div><div>case of Liberty India (supra) and Sterling Foods,</div><div>Mangalore (supra). It is submitted that therefore, relying</div><div>upon and following the decisions of this Hon’ble Court in</div><div>the aforesaid two decisions, the High Court has not</div><div>committed any error in holding that the assessee is not</div><div>entitled to the deductions under Section 80-IB on the</div><div>amount received by way of DEPB and Duty Drawback</div><div>Schemes.</div><div>4.1 Insofar as the reliance placed by the assessee upon</div><div>the decision of this Court in the case of Meghalaya</div><div>Steels Limited (supra) is concerned, it is submitted that</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 8 of 36</div><div>in the case of Meghalaya Steels Limited (supra), this</div><div>Court has not disagreed with or disapproved the decision</div><div>in the case of Liberty India (supra) or Sterling Foods,</div><div>Mangalore (supra). It is submitted that even otherwise,</div><div>the said decisions shall not be applicable in case of</div><div>receipt of the amount under DEPB and Duty Drawback</div><div>Schemes as the same cannot be said to be an income</div><div>that falls under the head “profits and gains of business or</div><div>profession”.</div><div>4.2 Shri Balbir Singh, learned ASG has taken us</div><div>through the scheme of Section 28 and Section 80-IB of</div><div>the Act, 1961. It is submitted that insofar as Section 28 is</div><div>concerned, it speaks about the income that falls under the</div><div>head of “profit and gains of business or profession”. That</div><div>earlier there used to be a dispute regarding the receipt by</div><div>way of incentives from the Government being in the</div><div>nature of cash assistance, Duty Drawback, profits on</div><div>transfer of DEPB Scheme, as to whether these receipts</div><div>were capital receipts or revenue receipts and would these</div><div>be taxable. That to put an end to the uncertainty, the</div><div>legislature by way of inserting clauses (iiia), (iiib), (iiic),</div><div>(iiid) and (iiie) in Section 28 has made the said incentives</div><div>taxable under the head of profits and gains of business</div><div>and profession.</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 9 of 36</div><div>4.3 It is further submitted that Section 80-IB provides for</div><div>deductions in respect of profits and gains from certain</div><div>‘industrial undertakings’ other than infrastructure</div><div>development undertakings. That this Section applies to</div><div>the following “industrial undertakings” which are eligible</div><div>for deduction under the said Section:-</div><div>a) Small scale industries into manufacturing and</div><div>production</div><div>b) Undertaking in industrially backward state and</div><div>North-Eastern Region</div><div>c) Ship</div><div>d) Hotels</div><div>e) Cold storage plants and cold chains</div><div>f) Mineral oil and natural gas</div><div>g) Housing projects</div><div>h) Scientific research and development</div><div>i) Processing, preservation and packaging of</div><div>food items</div><div>j) Multiplex theatre</div><div>k) Convention centre</div><div>l) Hospitals in rural and specified areas</div><div>4.4 It is next submitted that as per the language used in</div><div>Section 80-IB with regard to calculating the deduction, the</div><div>deduction would be applicable on “any profits and gains</div><div>‘derived from’ any business referred to in…” included in</div><div>the gross total income of the assessee. That the most</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 10 of 36</div><div>important thing to be considered while interpreting the</div><div>said section is that the words used are “derived from” and</div><div>not “attributable to”. That the words “attributable to” in the</div><div>given clause have been given a wider connotation as</div><div>opposed to the words “derived from” which have been</div><div>interpreted to be confined to “first degree sources”. It is</div><div>submitted that the words “derived from” have been given</div><div>a restrictive interpretation.</div><div>4.5 It is contended that the connotation “derived from”</div><div>used in Section 80-IB has to be read to be unit specific</div><div>and cannot be read as “standalone” since the words used</div><div>in the clauses of Section 80-IB are “industrial</div><div>undertaking”. That the core issue therefore, pertains to</div><div>the interpretation of the words “derived from” in Section</div><div>80-IB of the Act. It is submitted that on a fair reading of</div><div>Section 80-IB read with Section 28 and on true</div><div>interpretation of Section 80-IB, the DEPB and Duty</div><div>Drawback Schemes cannot be said to be deriving the</div><div>income from the business undertaking and, therefore,</div><div>deduction under Section 80-IB on such receipt of the Duty</div><div>Drawback shall not be allowable as a deduction.</div><div>4.6 It is submitted that in the case of Sterling Foods,</div><div>Mangalore (supra), while adjudicating the issue of</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 11 of 36</div><div>whether on earning of import entitlements under an export</div><div>promotion scheme of the Central Government, deduction</div><div>under Section 80HH would be allowable or not, this Court</div><div>gave the words “derived from” used in Section 80HH a</div><div>restricted interpretation and it was observed that since the</div><div>words “derived from” have been used, it shall suggest to</div><div>go to the source of such profits and gains.</div><div>4.7 It is submitted that in the case of Liberty India</div><div>(supra), this Court has considered in detail, deduction in</div><div>respect of profits and gains “derived from”. That in the</div><div>said decision, this Court has discussed the DEPB and</div><div>Duty Drawback and thereafter has held that the Duty</div><div>Drawback and DEPB benefits cannot be credited against</div><div>the cost of manufacture of goods debited in the profit and</div><div>loss account for the purpose of Section 80-IB as such</div><div>remissions would constitute independent source of</div><div>income, beyond the first degree nexus between profits</div><div>and the industrial undertaking.</div><div>4.8 Insofar as the reliance placed by the assessee upon</div><div>the decision of this Court in the case of Meghalaya</div><div>Steels Limited (supra) is concerned, it is submitted that</div><div>the question in Meghalaya Steels Limited (supra)</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 12 of 36</div><div>pertained to three subsidies, namely, a) Transport</div><div>Subsidy, b) Interest Subsidy and c) Power Subsidy. That</div><div>this Court held that since these subsidies directly affect</div><div>the cost of manufacturing, they have a direct nexus</div><div>between the profits and gains of the undertaking. Since</div><div>these subsidies have a direct nexus, they can be said to</div><div>be derived from the industrial undertaking. It is submitted</div><div>that though in the said decision, this Court has not held</div><div>the decision in the case of Liberty India (supra) to be</div><div>bad in law, in para 20, this Court has also observed that</div><div>since if there is no export, there is no DEPB entitlement.</div><div>Therefore, its relation to manufacture of a product and/or</div><div>sale within India is not proximate or direct but is one step</div><div>removed. That it is observed that the object behind the</div><div>DEPB entitlement, as has been held by this Court, is to</div><div>neutralise the incidence of customs duty payment on the</div><div>import content of the export product. In such a scenario, it</div><div>cannot be said that such duty exemption scheme is</div><div>derived from profits and gains made by the industrial</div><div>undertaking or business itself. It is submitted that,</div><div>therefore, in light of the above, the decision in the case of</div><div>Meghalaya Steels Limited (supra) shall not be</div><div>applicable to the present matter as it pertains to the</div><div>above-mentioned subsidies only. It is next submitted that</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 13 of 36</div><div>though binding, the ITAT did not follow the decisions of</div><div>this Court in the case of Liberty India (supra) and</div><div>Sterling Foods, Mangalore (supra), and, therefore, the</div><div>High Court has rightly set aside the order passed by the</div><div>ITAT following the decisions of this Court in the case of</div><div>Liberty India (supra) and Sterling Foods, Mangalore</div><div>(supra). It is submitted that therefore, the impugned</div><div>judgment and order passed by the High Court is not</div><div>required to be interfered with.</div><div>4.9 Making above submissions, it is prayed that the</div><div>present appeal be dismissed.</div><div>5. Heard the learned counsel for the respective parties</div><div>at length.</div><div>6. The short question, which is posed for consideration</div><div>of this Court is:-</div><div>Whether on the income amount received / profit</div><div>from DEPB and Duty Drawback Schemes, the</div><div>assessee is entitled to deduction under Section 80-</div><div>IB of the Income Tax Act, 1961 and whether such an</div><div>income can be said to be an income “derived from”</div><div>industrial undertaking?</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 14 of 36</div><div>7. While considering the aforesaid issue/question,</div><div>relevant portion of Section 28 and Section 80-IB are</div><div>required to be referred to, which are as under:-</div><div>“28. Profits and gains of business or</div><div>profession.—The following income shall be</div><div>chargeable to income tax under the head</div><div>“Profits and gains of business or profession”,</div><div>—</div><div>XXXXXXXX</div><div>(iii-a) profits on sale of a licence granted under</div><div>the Imports (Control) Order, 1955, made</div><div>under the Imports and Exports (Control) Act,</div><div>1947 (18 of 1947);</div><div>(iii-b) cash assistance (by whatever name</div><div>called) received or receivable by any person</div><div>against exports under any scheme of the</div><div>Government of India;</div><div>(iii-c) any duty of customs or excise repaid or</div><div>repayable as drawback to any person against</div><div>exports under the Customs and Central</div><div>Excise Duties Drawback Rules, 1971;</div><div>(iii-d) any profit on the transfer of the Duty</div><div>Entitlement Pass Book Scheme, being the</div><div>Duty Remission Scheme under the export and</div><div>import policy formulated and announced</div><div>under Section 5 of the Foreign Trade</div><div>(Development and Regulation) Act, 1992 (22</div><div>of 1992);</div><div>(iii-e) any profit on the transfer of the Duty</div><div>Free Replenishment Certificate, being the</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 15 of 36</div><div>Duty Remission Scheme under the export and</div><div>import policy formulated and announced</div><div>under Section 5 of the Foreign Trade</div><div>(Development and Regulation) Act, 1992 (22</div><div>of 1992);</div><div>XXXXXXXX”</div><div>“80-IB. Deduction in respect of profits and</div><div>gains from certain industrial undertakings</div><div>other than infrastructure development</div><div>undertakings.—(1) Where the gross total</div><div>income of an assessee includes any profits</div><div>and gains derived from any business referred</div><div>to in sub-sections (3) to (11), (11-A) and (11-</div><div>B) (such business being hereinafter referred</div><div>to as the eligible business), there shall, in</div><div>accordance with and subject to the provisions</div><div>of this section, be allowed, in computing the</div><div>total income of the assessee, a deduction</div><div>from such profits and gains of an amount</div><div>equal to such percentage and for such</div><div>number of assessment years as specified in</div><div>this section.</div><div>(2) This section applies to any industrial</div><div>undertaking which fulfils all the following</div><div>conditions, namely:—</div><div>(i) it is not formed by splitting up, or the</div><div>reconstruction, of a business already in</div><div>existence:</div><div>Provided that this condition shall not apply in</div><div>respect of an industrial undertaking which is</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 16 of 36</div><div>formed as a result of the re-establishment,</div><div>reconstruction or revival by the assessee of</div><div>the business of any such industrial</div><div>undertaking as is referred to in Section 33-B,</div><div>in the circumstances and within the period</div><div>specified in that section;</div><div>(ii) it is not formed by the transfer to a new</div><div>business of machinery or plant previously</div><div>used for any purpose;</div><div>(iii) it manufactures or produces any article or</div><div>thing, not being any article or thing specified in</div><div>the list in the Eleventh Schedule, or operates</div><div>one or more cold storage plant or plants, in</div><div>any part of India:</div><div>Provided that the condition in this clause</div><div>shall, in relation to a small-scale industrial</div><div>undertaking or an industrial undertaking</div><div>referred to in sub-section (4) shall apply as if</div><div>the words ‘not being any article or thing</div><div>specified in the list in the Eleventh Schedule’</div><div>had been omitted.</div><div>Explanation 1.—For the purposes of clause</div><div>(ii), any machinery or plant which was used</div><div>outside India by any person other than the</div><div>assessee shall not be regarded as machinery</div><div>or plant previously used for any purpose, if the</div><div>following conditions are fulfilled, namely:—</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 17 of 36</div><div>(a) such machinery or plant was not, at any</div><div>time previous to the date of the installation</div><div>by the assessee, used in India;</div><div>(b) such machinery or plant is imported into</div><div>India from any country outside India; and</div><div>(c) no deduction on account of depreciation in</div><div>respect of such machinery or plant has</div><div>been allowed or is allowable under the</div><div>provisions of this Act in computing the total</div><div>income of any person for any period prior</div><div>to the date of the installation of the</div><div>machinery or plant by the assessee.</div><div>Explanation 2.—Where in the case of an</div><div>industrial undertaking, any machinery or plant</div><div>or any part thereof previously used for any</div><div>purpose is transferred to a new business and</div><div>the total value of the machinery or plant or</div><div>part so transferred does not exceed twenty</div><div>per cent of the total value of the machinery or</div><div>plant used in the business, then, for the</div><div>purposes of clause (ii) of this sub-section, the</div><div>condition specified therein shall be deemed to</div><div>have been complied with;</div><div>(iv) in a case where the industrial undertaking</div><div>manufactures or produces articles or things,</div><div>the undertaking employs ten or more workers</div><div>in a manufacturing process carried on with the</div><div>aid of power, or employs twenty or more</div><div>workers in a manufacturing process carried on</div><div>without the aid of power.</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 18 of 36</div><div>(3) The amount of deduction in the case of an</div><div>industrial undertaking shall be twenty-five per</div><div>cent (or thirty per cent where the assessee is</div><div>a company), of the profits and gains derived</div><div>from such industrial undertaking for a period</div><div>of ten consecutive assessment years (or</div><div>twelve consecutive assessment years where</div><div>the assessee is a cooperative society)</div><div>beginning with the initial assessment year</div><div>subject to the fulfilment of the following</div><div>conditions, namely:—</div><div>(i) it begins to manufacture or produce,</div><div>articles or things or to operate such plant or</div><div>plants at any time during the period beginning</div><div>from the 1st day of April, 1991 and ending on</div><div>the 31st day of March, 1995 or such further</div><div>period as the Central Government may, by</div><div>notification in the Official Gazette, specify with</div><div>reference to any particular undertaking;</div><div>(ii) where it is an industrial undertaking being</div><div>a small-scale industrial undertaking, it begins</div><div>to manufacture or produce articles or things or</div><div>to operate its cold storage plant not specified</div><div>in sub-section (4) or sub-section (5) at any</div><div>time during the period beginning on the 1st</div><div>day of April, 1995 and ending on the 31st day</div><div>of March, 2002.</div><div>(4) The amount of deduction in the case of an</div><div>industrial undertaking in an industrially</div><div>backward State specified in the Eighth</div><div>Schedule shall be hundred per cent of the</div><div>profits and gains derived from such industrial</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 19 of 36</div><div>undertaking for five assessment years</div><div>beginning with the initial assessment year and</div><div>thereafter twenty-five per cent (or thirty per</div><div>cent where the assessee is a company) of the</div><div>profits and gains derived from such industrial</div><div>undertaking:</div><div>Provided that the total period of deduction</div><div>does not exceed ten consecutive</div><div>asssessment years (or twelve consecutive</div><div>assessment years where the assessee is a</div><div>cooperative society) subject to fulfilment of the</div><div>condition that it begins to manufacture or</div><div>produce articles or things or to operate its cold</div><div>storage plant or plants during the period</div><div>beginning on the 1st day of April, 1993 and</div><div>ending on the 31st day of March, 2004:</div><div>Provided further that in the case of such</div><div>industries in the North-Eastern Region, as</div><div>may be notified by the Central Government,</div><div>the amount of deduction shall be hundred per</div><div>cent of profits and gains for a period of ten</div><div>assessment years, and the total period of</div><div>deduction shall in such a case not exceed ten</div><div>assessment years:</div><div>Provided also that no deduction under this</div><div>sub-section shall be allowed for the</div><div>assessment year beginning on the 1st day of</div><div>April, 2004 or any subsequent year to any</div><div>undertaking or enterprise referred to in subsection (2) of Section 80-IC.</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 20 of 36</div><div>Provided also that in the case of an industrial</div><div>undertaking in the State of Jammu and</div><div>Kashmir, the provisions of the first proviso</div><div>shall have effect as if for the figures, letters</div><div>and words “31st day of March, 2004”, the</div><div>figures, letters and words “31st day of March,</div><div>2012” had been substituted:</div><div>Provided also that no deduction under this</div><div>sub-section shall be allowed to an industrial</div><div>undertaking in the State of Jammu and</div><div>Kashmir which is engaged in the manufacture</div><div>or production of any article or thing specified</div><div>in Part C of the Thirteenth Schedule.</div><div>(5) The amount of deduction in the case of an</div><div>industrial undertaking located in such</div><div>industrially backward districts as the Central</div><div>Government may, having regard to the</div><div>prescribed guidelines, by notification in the</div><div>Official Gazette, specify in this behalf as</div><div>industrially backward district of category ‘A’ or</div><div>an industrially backward district of category ‘B’</div><div>shall be,—</div><div>(i) hundred per cent of the profits and gains</div><div>derived from an industrial undertaking located</div><div>in a backward district of category ‘A’ for five</div><div>assessment years beginning with the initial</div><div>assessment year and thereafter, twenty-five</div><div>per cent (or thirty per cent where the</div><div>assessee is a company) of the profits and</div><div>gains of an industrial undertaking:</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 21 of 36</div><div>Provided that the total period of deduction</div><div>shall not exceed ten consecutive assessment</div><div>years or where the assessee is a cooperative</div><div>society, twelve consecutive assessment</div><div>years:</div><div>Provided further that the industrial</div><div>undertaking begins to manufacture or produce</div><div>articles or things or to operate its cold storage</div><div>plant or plants at any time during the period</div><div>beginning on the 1st day of October, 1994 and</div><div>ending on the 31st day of March, 2004;</div><div>(ii) hundred per cent of the profits and gains</div><div>derived from an industrial undertaking located</div><div>in a backward district of category ‘B’ for three</div><div>assessment years beginning with the initial</div><div>assessment year and thereafter, twenty-five</div><div>per cent (or thirty per cent where the</div><div>assessee is a company) of the profits and</div><div>gains of an industrial undertaking:</div><div>Provided that the total period of deduction</div><div>does not exceed eight consecutive</div><div>assessment years (or where the assessee is a</div><div>cooperative society, twelve consecutive</div><div>assessment years):</div><div>Provided further that the industrial</div><div>undertaking begins to manufacture or produce</div><div>articles or things or to operate its cold storage</div><div>plant or plants at any time during the period</div><div>beginning on the 1st day of October, 1994 and</div><div>ending on the 31st day of March, 2004.</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 22 of 36</div><div>XXXXXXXX”</div><div>7.1 Thus, as per Sections 28(iiid) and (iiie) any profit on</div><div>the transfer of the Duty Drawback and on transfer of</div><div>DEPB Schemes, etc., shall be chargeable to income tax</div><div>under the head “Profits and gains of business or</div><div>profession”. It appears that earlier, there used to be a</div><div>dispute regarding the receipt by way of incentives from</div><div>the Government being in the nature of cash assistance,</div><div>duty drawback, profits on transfer of DEPB Scheme, etc.,</div><div>i.e., as to whether these receipts were capital receipt or</div><div>revenue receipt and would thus, be taxable. However,</div><div>thereafter, and in order to put an end to the dispute, the</div><div>legislature by way of inserting clauses 28 (iiia), (iiib), (iiic),</div><div>(iiid) and (iiie) has made the said incentives taxable under</div><div>the head of “profits and gains of business and profession”.</div><div>7.2 Section 80-IB provides for deductions in respect of</div><div>profits and gains from certain industrial undertakings.</div><div>Therefore, as such for claiming deductions under Section</div><div>80-IB, it must be on the “profits and gains derived from</div><div>industrial undertakings” mentioned in Section 80-IB. An</div><div>identical question came to be considered by this Court</div><div>and, more particularly, with respect to the profit from</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 23 of 36</div><div>DEPB and Duty Drawback Schemes, in the case of</div><div>Liberty India (supra).</div><div>7.3 After taking into consideration the DEPB and Duty</div><div>Drawback Schemes, ultimately, it is observed and held in</div><div>the case of Liberty India (supra) that DEPB / Duty</div><div>Drawback Schemes are incentives which flow from the</div><div>schemes framed by the Central Government or from</div><div>Section 75 of the Customs Act, 1962 and, hence,</div><div>incentive profits are not profits derived from the eligible</div><div>business under Section 80-IB. It is observed that they</div><div>belong to the category of ancillary profits of such</div><div>undertakings.</div><div>7.4 Similar view was also expressed with respect to the</div><div>Duty Drawback. Thereafter, in paragraph 43 of the above</div><div>decision, it is observed and held that duty drawback,</div><div>DEPB benefits, rebates, etc. cannot be credited against</div><div>the cost of manufacture of goods debited in the profit and</div><div>loss account for purposes of Sections 80-IA/80-IB as such</div><div>remissions (credits) would constitute an independent</div><div>source of income beyond the first degree nexus between</div><div>profits and the industrial undertaking. Thus, it is observed</div><div>and held that duty drawback receipts / DEPB benefits do</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 24 of 36</div><div>not form part of the net profits of eligible industrial</div><div>undertakings for the purpose of Section 80-IB of the Act,</div><div>1961. The relevant discussions are in paragraphs 24, 28</div><div>to 36, 38, 39, 41, 43 and 45, which are as under:-</div><div>“24. Before analysing Section 80-IB, as</div><div>a prefatory note, it needs to be mentioned that</div><div>the 1961 Act broadly provides for two types of</div><div>tax incentives, namely, investment-linked</div><div>incentives and profit-linked incentives.</div><div>Chapter VI-A which provides for incentives in</div><div>the form of tax deductions essentially belong</div><div>to the category of “profit-linked incentives”.</div><div>Therefore, when Sections 80-IA/80-IB refers</div><div>to profits derived from eligible business, it is</div><div>not the ownership of that business which</div><div>attracts the incentives. What attracts the</div><div>incentives under Sections 80-IA/80-IB is the</div><div>generation of profits (operational profits).</div><div>XXXXXXXX</div><div>28. In the present batch of cases, the</div><div>controversy which arises for determination is:</div><div>whether DEPB credit/duty drawback receipt</div><div>comes within the first degree sources?</div><div>29. According to the assessee(s), DEPB</div><div>credit/duty drawback receipt reduces the</div><div>value of purchases (cost neutralisation),</div><div>hence, it comes within first degree source as it</div><div>increases the net profit proportionately.</div><div>30. On the other hand, according to the</div><div>Department, DEPB credit/duty drawback</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 25 of 36</div><div>receipt do not come within the first degree</div><div>source as the said incentives flow from the</div><div>incentive schemes enacted by the</div><div>Government of India or from Section 75 of the</div><div>Customs Act, 1962. Hence, according to the</div><div>Department, in the present cases, the first</div><div>degree source is the incentive</div><div>scheme/provisions of the Customs Act. In this</div><div>connection, the Department places heavy</div><div>reliance on the judgment of this Court</div><div>in Sterling Foods [(1999) 4 SCC 98 : (1999)</div><div>237 ITR 579] .</div><div>31. Therefore, in the present cases, in</div><div>which we are required to examine the eligible</div><div>business of an industrial undertaking, we need</div><div>to trace the source of the profits to</div><div>manufacture. (See CIT v. Kirloskar Oil</div><div>Engines Ltd. [(1986) 157 ITR 762 (Bom)])</div><div>32. Continuing our analysis of Sections</div><div>80-IA/80-IB it may be mentioned that subsection (13) of Section 80-IB provides for</div><div>applicability of the provisions of sub-section</div><div>(5) and sub-sections (7) to (12) of Section 80-</div><div>IA, so far as may be, applicable to the eligible</div><div>business under Section 80-IB. Therefore, at</div><div>the outset, we stated that one needs to read</div><div>Sections 80-I, 80-IA and 80-IB as having a</div><div>common scheme.</div><div>33. On perusal of sub-section (5) of</div><div>Section 80-IA, it is noticed that it provides for</div><div>the manner of computation of profits of an</div><div>eligible business. Accordingly, such profits are</div><div>to be computed as if such eligible business is</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 26 of 36</div><div>the only source of income of the assessee.</div><div>Therefore, the devices adopted to reduce or</div><div>inflate the profits of eligible business has got</div><div>to be rejected in view of the overriding</div><div>provisions of sub-section (5) of Section 80-IA,</div><div>which are also required to be read into</div><div>Section 80-IB. [See Section 80-IB(13)]. We</div><div>may reiterate that Sections 80-I, 80-IA and 80-</div><div>IB have a common scheme and if so read it is</div><div>clear that the said sections provide for</div><div>incentives in the form of deduction(s) which</div><div>are linked to profits and not to investment.</div><div>34. On an analysis of Sections 80-IA</div><div>and 80-IB it becomes clear that any industrial</div><div>undertaking, which becomes eligible on</div><div>satisfying sub-section (2), would be entitled to</div><div>deduction under sub-section (1) only to the</div><div>extent of profits derived from such industrial</div><div>undertaking after specified date(s). Hence,</div><div>apart from eligibility, sub-section (1) purports</div><div>to restrict the quantum of deduction to a</div><div>specified percentage of profits. This is the</div><div>importance of the words “derived from</div><div>industrial undertaking” as against “profits</div><div>attributable to industrial undertaking”.</div><div>35. DEPB is an incentive. It is given</div><div>under the Duty Exemption Remission</div><div>Scheme. Essentially, it is an export incentive.</div><div>No doubt, the object behind DEPB is to</div><div>neutralise the incidence of customs duty</div><div>payment on the import content of export</div><div>product. This neutralisation is provided for by</div><div>credit to customs duty against export product.</div><div>Under DEPB, an exporter may apply for credit</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 27 of 36</div><div>as percentage of FOB value of exports made</div><div>in freely convertible currency. Credit is</div><div>available only against the export product and</div><div>at rates specified by DGFT for import of raw</div><div>materials, components, etc. DEPB credit</div><div>under the Scheme has to be calculated by</div><div>taking into account the deemed import content</div><div>of the export product as per the basic customs</div><div>duty and special additional duty payable on</div><div>such deemed imports.</div><div>36. Therefore, in our view, DEPB/duty</div><div>drawback are incentives which flow from the</div><div>schemes framed by the Central Government</div><div>or from Section 75 of the Customs Act, 1962,</div><div>hence, incentives profits are not profits</div><div>derived from the eligible business under</div><div>Section 80-IB. They belong to the category of</div><div>ancillary profits of such undertakings.</div><div>XXXXXXXX</div><div>38. Section 75 of the Customs Act, 1962</div><div>and Section 37 of the Central Excise Act,</div><div>1944 empower the Government of India to</div><div>provide for repayment of customs and excise</div><div>duty paid by an assessee. The refund is of the</div><div>average amount of duty paid on materials of</div><div>any particular class or description of goods</div><div>used in the manufacture of export goods of</div><div>specified class. The Rules do not envisage a</div><div>refund of an amount arithmetically equal to</div><div>customs duty or central excise duty actually</div><div>paid by an individual importer-cummanufacturer. Sub-section (2) of Section 75 of</div><div>the Customs Act requires the amount of</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 28 of 36</div><div>drawback to be determined on a consideration</div><div>of all the circumstances prevalent in a</div><div>particular trade and also based on the facts</div><div>situation relevant in respect of each of various</div><div>classes of goods imported. Basically, the</div><div>source of duty drawback receipt lies in Section</div><div>75 of the Customs Act and Section 37 of the</div><div>Central Excise Act.</div><div>39. Analysing the concept of remission</div><div>of duty drawback and DEPB, we are satisfied</div><div>that the remission of duty is on account of the</div><div>statutory/policy provisions in the Customs</div><div>Act/Scheme(s) framed by the Government of</div><div>India. In the circumstances, we hold that</div><div>profits derived by way of such incentives do</div><div>not fall within the expression “profits derived</div><div>from industrial undertaking” in Section 80-IB.</div><div>XXXXXXXX</div><div>41. The cost of purchase includes duties</div><div>and taxes (other than those subsequently</div><div>recoverable by the enterprise from taxing</div><div>authorities), freight inwards and other</div><div>expenditure directly attributable to the</div><div>acquisition. Hence trade discounts, rebate,</div><div>duty drawback, and such similar items</div><div>are deducted in determining the costs of</div><div>purchase. Therefore, duty drawback, rebate,</div><div>etc. should not be treated as adjustment</div><div>(credited) to cost of purchase or manufacture</div><div>of goods. They should be treated as separate</div><div>items of revenue or income and accounted for</div><div>accordingly (see p. 44 of Indian Accounting</div><div>Standards & GAAP by Dolphy D'Souza).</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 29 of 36</div><div>XXXXXXXX</div><div>43. Therefore, we are of the view that</div><div>duty drawback, DEPB benefits, rebates, etc.</div><div>cannot be credited against the cost of</div><div>manufacture of goods debited in the profit and</div><div>loss account for purposes of Sections 80-</div><div>IA/80-IB as such remissions (credits) would</div><div>constitute independent source of income</div><div>beyond the first degree nexus between profits</div><div>and the industrial undertaking.</div><div>XXXXXXXX</div><div>45. In the circumstances, we hold that</div><div>duty drawback receipt/DEPB benefits do not</div><div>form part of the net profits of eligible industrial</div><div>undertaking for the purposes of Sections 80-</div><div>I/80-IA/80-IB of the 1961 Act. The appeals</div><div>are, accordingly, dismissed with no order as to</div><div>costs.”</div><div>7.5 Prior thereto, the treatment of “profits and gains</div><div>derived from industrial undertakings” for the purpose of</div><div>determining tax liability came up for consideration before</div><div>this Court in the case of Sterling Foods, Mangalore</div><div>(supra), which was followed by this Court in the case of</div><div>Liberty India (supra). In the case of Sterling Foods,</div><div>Mangalore (supra), in paragraph 7 and 13, it is observed</div><div>and held as under:-</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 30 of 36</div><div>“7. The question, therefore, was</div><div>whether the income derived by the assessee</div><div>by the sale of the import entitlements was</div><div>profit and gain derived from its industrial</div><div>undertaking of processing seafood. The</div><div>Division Bench of the High Court came to the</div><div>conclusion that the income which the</div><div>assessee had made by selling the import</div><div>entitlements was not a profit and gain which it</div><div>had derived from its industrial undertaking.</div><div>For that purpose, it relied upon the decision of</div><div>this Court in Cambay Electric Supply</div><div>Industrial Co. Ltd. v. CIT [(1978) 2 SCC 644 :</div><div>1978 SCC (Tax) 119 : (1978) 113 ITR 84]. It</div><div>was there held that the expression</div><div>“attributable to” was wider in import than the</div><div>expression “derived from”. The expression of</div><div>wider import, namely, “attributable to”, was</div><div>used when the legislature intended to cover</div><div>receipts from sources other than the actual</div><div>conduct of the business. The Division Bench</div><div>of the High Court observed that to obtain the</div><div>benefit of Section 80-HH the assessee had to</div><div>establish that the profits and gains were</div><div>derived from its industrial undertaking and it</div><div>was just not sufficient that a commercial</div><div>connection was established between the</div><div>profits earned and the industrial undertaking.</div><div>The industrial undertaking itself had to be the</div><div>source of the profit. The business of the</div><div>industrial undertaking had directly to yield that</div><div>profit. The industrial undertaking had to be the</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 31 of 36</div><div>direct source of that profit and not the means</div><div>to earn any other profit. Reference was also</div><div>made to the meaning of the word “source”,</div><div>and it was held that the import entitlements</div><div>that the assessee had earned were awarded</div><div>by the Central Government under the scheme</div><div>to encourage exports. The source referable to</div><div>the profits and gains arising out of the sale</div><div>proceeds of the import entitlement was,</div><div>therefore, the scheme of the Central</div><div>Government and not the industrial undertaking</div><div>of the assessee.</div><div>XXXXXXXX</div><div>13. We do not think that the source of the</div><div>import entitlements can be said to be the</div><div>industrial undertaking of the assessee. The</div><div>source of the import entitlements can, in the</div><div>circumstances, only be said to be the Export</div><div>Promotion Scheme of the Central Government</div><div>whereunder the export entitlements become</div><div>available. There must be, for the application of</div><div>the words “derived from”, a direct nexus</div><div>between the profits and gains and the</div><div>industrial undertaking. In the instant case the</div><div>nexus is not direct but only incidental. The</div><div>industrial undertaking exports processed</div><div>seafood. By reason of such export, the Export</div><div>Promotion Scheme applies. Thereunder, the</div><div>assessee is entitled to import entitlements,</div><div>which it can sell. The sale consideration</div><div>therefrom cannot, in our view, be held to</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 32 of 36</div><div>constitute a profit and gain derived from the</div><div>assessee's industrial undertaking.”</div><div>7.6 Therefore, following the law laid down by this Court</div><div>in the case of Sterling Foods, Mangalore (supra) and</div><div>Liberty India (supra) as such, no error has been</div><div>committed by the High Court in holding that on the profit</div><div>from DEPB and Duty Drawback claims, the assessee</div><div>shall not be entitled to the deductions under Section 80-IB</div><div>as such income cannot be said to be an income “derived</div><div>from” industrial undertaking and even otherwise as per</div><div>Section 28(iiid) and (iiie), such an income is chargeable to</div><div>tax.</div><div>7.7 Insofar as reliance placed by the learned counsel for</div><div>the assessee upon the subsequent decision of this Court</div><div>in the case of Meghalaya Steels Limited (supra) is</div><div>concerned, at the outset, it is required to be noted that in</div><div>the case of Meghalaya Steels Limited (supra), it was a</div><div>case of three subsidies, namely a) Transport Subsidy, b)</div><div>Interest Subsidy, and c) Power Subsidy and in that</div><div>context this Court observed and held that since these</div><div>subsidies directly affect the cost of manufacturing, they</div><div>have a direct nexus with the profits and gains of the</div><div>undertaking and since these subsidies have a direct</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 33 of 36</div><div>nexus, they can be said to be derived from the industrial</div><div>undertaking. It is to be noted that in the case of</div><div>Meghalaya Steels Limited (supra), this Court did take</div><div>note of the decision in the case of Liberty India (supra),</div><div>however, this Court specifically observed that the case of</div><div>Liberty India (supra) was concerned with an export</div><div>incentive, which is very far removed from reimbursement</div><div>of an element of cost. While dealing with the decision in</div><div>the case of Liberty India (supra), this Court distinguished</div><div>Duty Entitlement Pass Book and Duty Drawback</div><div>Schemes and specifically observed that the DPEB / Duty</div><div>Drawback Scheme is not related to the business of an</div><div>industrial undertaking for manufacturing or selling its</div><div>products and the DEPB entitlement arises only when the</div><div>undertaking goes on to export the said product, that is,</div><div>after it manufactures or produces the same. In paragraph</div><div>20, in the case of Meghalaya Steels Limited (supra),</div><div>while distinguishing the profit derived from DEPB / Duty</div><div>Drawback, it is observed and held as under:-</div><div>“20. Liberty India [Liberty India v. CIT,</div><div>(2009) 9 SCC 328] being the fourth judgment</div><div>in this line also does not help the Revenue.</div><div>What this Court was concerned with was an</div><div>export incentive, which is very far removed</div><div>from reimbursement of an element of cost. A</div><div>DEPB drawback scheme is not related to the</div><div>business of an industrial undertaking for</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 34 of 36</div><div>manufacturing or selling its products. DEPB</div><div>entitlement arises only when the undertaking</div><div>goes on to export the said product, that is,</div><div>after it manufactures or produces the same.</div><div>Pithily put, if there is no export, there is no</div><div>DEPB entitlement, and therefore its relation to</div><div>manufacture of a product and/or sale within</div><div>India is not proximate or direct but is one step</div><div>removed. Also, the object behind DEPB</div><div>entitlement, as has been held by this Court, is</div><div>to neutralise the incidence of customs duty</div><div>payment on the import content of the export</div><div>product which is provided for by credit to</div><div>customs duty against the export product. In</div><div>such a scenario, it cannot be said that such</div><div>duty exemption scheme is derived from profits</div><div>and gains made by the industrial undertaking</div><div>or business itself.”</div><div>Thus, from paragraph 20 of the said decision, it can</div><div>be seen that this Court did not disapprove of the decision</div><div>of this Court in the case of Liberty India (supra). Even in</div><div>the case of Meghalaya Steels Limited (supra), this</div><div>Court did not consider the earlier decision in the case of</div><div>Sterling Foods, Mangalore (supra). Thus, the decision</div><div>of this Court in the cases of Liberty India (supra) and</div><div>Sterling Foods, Mangalore (supra), which as such are</div><div>on DEPB / Duty Drawback Schemes clinch the issue at</div><div>hand. It cannot be said that the decision taken in the case</div><div>of Meghalaya Steels Limited (supra) is contrary to the</div><div>decisions in the case of Sterling Foods, Mangalore</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 35 of 36</div><div>(supra) and Liberty India (supra). On the contrary, the</div><div>observations made in paragraph 20 can be said to be in</div><div>favour of the Revenue and against the assessee.</div><div>8. In view of the above and for the reasons stated</div><div>above, the High Court has rightly held that the respondent</div><div>– assessee is not entitled to the deductions under Section</div><div>80-IB on the amount of DEPB as well as Duty Drawback</div><div>Schemes. We hold that on the profit earned from DEPB /</div><div>Duty Drawback Schemes, the assessee is not entitled to</div><div>deduction under Section 80-IB of the Act, 1961. Any</div><div>contrary decision of any High Court is held to be not good</div><div>law.</div><div>Present appeal deserves to be dismissed and is</div><div>accordingly dismissed. However, in the facts and</div><div>circumstances of the case, there shall be no order as to</div><div>costs.</div><div>………………………………….J.</div><div> [M.R. SHAH]</div><div>………………………………….J.</div><div> [B.V. NAGARATHNA]</div><div>NEW DELHI;</div><div>APRIL 10, 2023.</div><div>CIVIL APPEAL NO. 4822 OF 2022 Page 36 of 36</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-21591087266753683372023-04-10T06:13:00.001-07:002023-04-10T06:13:23.112-07:00Mansarovar Commercial Pvt. Ltd Versus Commissioner of Income Tax, Delhi <div>Mansarovar Commercial Pvt. Ltd Versus Commissioner of Income Tax, Delhi </div><div><br /></div>
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<p style="text-align: justify;"><b><a href="https://www.indianconstitution.in/p/landmark-judgments.html">Landmark Cases</a> of India / </b><span style="text-align: left;"><b><a href="https://www.indianconstitution.in/2021/09/100-100-landmark-cases-of-supreme-court.html">सुप्रीम कोर्ट के ऐतिहासिक फैसले</a></b></span></p>
<div><br /></div><div><br /></div><div>REPORTABLE</div><div>IN THE SUPREME COURT OF INDIA</div><div>CIVIL APPELLATE JURISDICTION</div><div>CIVIL APPEAL NO. 5769 OF 2022</div><div>Mansarovar Commercial Pvt. Ltd. …Appellant</div><div>Versus</div><div>Commissioner of Income Tax, Delhi …Respondent</div><div>WITH</div><div>CIVIL APPEAL NO. 5773 OF 2022</div><div>CIVIL APPEAL NO. 5772 OF 2022</div><div>CIVIL APPEAL NO. 5771 OF 2022</div><div>CIVIL APPEAL NO. 5770 OF 2022</div><div>J U D G M E N T</div><div>M.R. SHAH, J.</div><div>1. Feeling aggrieved and dissatisfied with the</div><div>impugned common judgment and order dated 22.02.2016</div><div>passed by the High Court of Delhi at New Delhi in Income</div><div>CA 5769/2022 Etc. Page 1 of 67</div><div>Tax Appeal Nos. 162/2002, 164/2002, 165/2002,</div><div>167/2002 & 168/2002, by which the High Court has</div><div>allowed the said appeals preferred by the Revenue and</div><div>has quashed and set aside the common order dated 08th</div><div>January, 2002 passed by the Income Tax Appellate</div><div>Tribunal, New Delhi (for short, ‘ITAT’) for Assessment</div><div>Years 1987-88, 1988-89 and 1989-90 and restored the</div><div>orders passed by the Assessing Officer, upheld by the</div><div>Commissioner of Income Tax (Appeals) (for short,</div><div>‘CIT(A)), the respective assessees have preferred the</div><div>present appeals.</div><div>Facts:</div><div>2. The facts leading to the present appeals in nutshell</div><div>are as under:</div><div>The respective assessees, namely, Mansarovar</div><div>Commercial Private Limited, Sovereign Commercial</div><div>Private Limited, Swastik Commercial Private Limited,</div><div>Trishul Commercial Private Limited and Pasupati Nath</div><div>Commercial Private Limited were incorporated under the</div><div>Registration of Companies (Sikkim) Act, 1961. Each of</div><div>the assessee companies claim to be carrying on the</div><div>CA 5769/2022 Etc. Page 2 of 67</div><div>business of commercial agents in cardamon and other</div><div>agricultural products.</div><div>2.1 Sikkim became part of India in April, 1975. The</div><div>Constitution (Thirty Sixth Amendment) Act, 1975 inserted</div><div>Article 371-F into the Constitution of India, in terms of</div><div>which not all the laws of India were extended to the new</div><div>State of Sikkim. Under Article 371-F (k) all laws in force</div><div>immediately before the appointed day, i.e., 26th April,</div><div>1975, in the territories comprising the State of Sikkim or</div><div>any part thereof were to continue to be in force therein</div><div>until amended or repealed by a competent legislature or</div><div>other competent authority. The Income Tax Act, 1961</div><div>(hereinafter referred to as the ‘Act’) was not made</div><div>straightway applicable to the State of Sikkim. Till such</div><div>extension of the Act to Sikkim by a notification issued</div><div>under Article 371-F(n), income tax was to be charged and</div><div>collected under the Sikkim State Income-tax Manual,</div><div>1948 (for short, ‘Sikkim Manual, 1948’). The recovery of</div><div>tax was under the scheme of the Sikkim (Collection of</div><div>Taxes and Prevention of Evasion of Payment of Taxes)</div><div>Act, 1987.</div><div>2.2 By a notification No. S.O. 1028E dated 7th</div><div>November, 1988 issued under Article 371-F(n) of the</div><div>Constitution, the Act, the Wealth Tax Act, 1957 and the</div><div>CA 5769/2022 Etc. Page 3 of 67</div><div>Gift Tax Act, 1958 were extended to the State of Sikkim.</div><div>In terms of para 2 of the said notification, the Central</div><div>Government appointed, by Notification S.O. 148E dated</div><div>23rd February, 1989, the 1st of April, 1989 as the date on</div><div>which the Act would come into force in the State of Sikkim</div><div>in relation to the previous year relevant to the Assessment</div><div>Year commencing on the 1st day of April, 1989. However</div><div>subsequently, by virtue of Section 26 of the Finance Act,</div><div>1989 the Act was made applicable to the State of Sikkim</div><div>from the previous year relevant to the Assessment Year</div><div>commencing from 1st April, 1990, thereby extending the</div><div>date of applicability of the Act by one year from the date</div><div>specified in the notification dated 23rd February, 1989.</div><div>2.3 The case of the assessees was that each of them</div><div>was a resident of Sikkim, carrying on business in Sikkim</div><div>and not elsewhere and that till 31st March, 1990, each of</div><div>them were governed by the Sikkim Manual, 1948 and not</div><div>the Act. Therefore, the stand of the assessees was that</div><div>the income earned by them till that date was income</div><div>earned in Sikkim from the business conducted/done in</div><div>Sikkim. On the other hand, the case of the Revenue was</div><div>that the control and management of each of the assessee</div><div>companies was wholly with their auditor, M/s Rattan</div><div>Gupta & Co., Chartered Accountants, who had their</div><div>CA 5769/2022 Etc. Page 4 of 67</div><div>offices in Karol Bagh, New Delhi and therefore, were</div><div>companies’ resident in India in terms of Section 6(3) of the</div><div>Act.</div><div>2.4 A search was conducted on 15th March, 1990 at the</div><div>premises of M/s Rattan Gupta & Co., Chartered</div><div>Accountant at Daryaganj, New Delhi and during the</div><div>course of the search, books of account, cheque books,</div><div>signed blank cheques, vouchers and other income</div><div>documents of the assessees were found. The statements</div><div>of the partners, former and current, of M/s Rattan Gupta &</div><div>Co., CA were recorded.</div><div>2.5 On 10th July, 1990, following the search conducted</div><div>on 15th March, 1990 at the premises of M/s Rattan Gupta</div><div>& Co., CA at Daryaganj, New Delhi, notices were issued</div><div>by the Assistant Commissioner of Income Tax (for short,</div><div>‘ACIT’) (Investigation), Circle 7(1), New Delhi to each of</div><div>the assessees under Section 148 of the Act, in respect of</div><div>Assessment Years 1987-88, 1988-89 and 1989-90</div><div>(Assessment Years under consideration). An order was</div><div>passed on 12th July, 1990 by ACIT (Investigation), Circle</div><div>13(1), New Delhi in respect of M/s Rattan Gupta & Co.</div><div>under section 132(5) of the Act. It appears that the said</div><div>Rattan Gupta informed the assessees about notices</div><div>under section 148 of the Act issued to each of them at the</div><div>CA 5769/2022 Etc. Page 5 of 67</div><div>address of M/s Rattan Gupta & Co. at Daryaganj, New</div><div>Delhi and affixed at the said premises of M/s Rattan</div><div>Gupta & Co.</div><div>2.6 Meanwhile, each of the assessees filed return of</div><div>income in terms of the Sikkim Manual, 1948 for the</div><div>Assessment Years in question on 27th April, 1990. A</div><div>demand notice was issued to each of them in respect</div><div>thereof on 23rd July, 1990.</div><div>2.7 The respective assessees filed writ petitions in the</div><div>High Court of Sikkim, challenging the notices issued</div><div>under section 148 of the Act. The Sikkim High Court</div><div>initially passed an interim order staying further</div><div>proceedings. The said interim order was modified in</div><div>terms of which the Department was permitted to continue</div><div>with its enquiry and seek facts and information from the</div><div>Directors of the assessee companies. The assessee</div><div>companies were required to furnish the necessary</div><div>information and also to file returns and produce the books</div><div>of accounts before the Assessing Officer, New Delhi in</div><div>compliance of the notices under section 148 of the Act.</div><div>Thereafter, the Sikkim High Court dismissed the writ</div><div>petitions holding that it had no jurisdiction to entertain the</div><div>said writ petitions since no part of the cause of action had</div><div>arisen in the State of Sikkim. It was observed that as the</div><div>CA 5769/2022 Etc. Page 6 of 67</div><div>notices were issued by the ACIT (Investigation), Circle</div><div>7(1), New Delhi and served on the assessees in New</div><div>Delhi, it had no jurisdiction over the actions of that</div><div>authority. It appears that the Sikkim High Court also</div><div>observed that “mere fact that the companies have</div><div>registered offices in Sikkim does not confer jurisdiction on</div><div>this Court.”</div><div>2.8 It appears that in the meanwhile, on the basis of the</div><div>returns filed by the assessees in Sikkim, the Income and</div><div>Sales Tax Department of Government of Sikkim raised a</div><div>revised demand on 30th November, 1990, cancelling the</div><div>earlier demand raised on 30th July, 1990.</div><div>2.9 After the dismissal of the writ petitions by the Sikkim</div><div>High Court on 20th July, 1993, the assessees filed writ</div><div>petitions before the Delhi High Court being Writ Petition</div><div>Nos. 5565 to 5569 of 1993. Initially, the Delhi High Court</div><div>passed an interim order staying the proceedings.</div><div>However thereafter on 13th August, 1998, an order was</div><div>passed by the Delhi High Court directing the AO to frame</div><div>the assessment subject to outcome of the writ petitions.</div><div>2.10 That thereafter on 24th August, 1998, notices were</div><div>issued to the assessee companies under section 148 of</div><div>the ACT by ACIT, Company Circle 2, New Delhi.</div><div>CA 5769/2022 Etc. Page 7 of 67</div><div>2.11 That on 09th October, 1998, separate assessment</div><div>orders were passed by the ACIT, Company Circle 2(2),</div><div>New Delhi for each of the Assessment Years in question.</div><div>The Assessing Officer concluded that each of the</div><div>assessees were “intentionally trying to take advantage of</div><div>the prevailing laws at Sikkim by routing money through</div><div>Sikkim and ploughing back in India.” The Assessing</div><div>Officer also rejected the objections raised by the</div><div>assessees as to the jurisdiction. The Assessing Officer</div><div>made additions to the income of the assessees for the</div><div>aforesaid three Assessment Years in question under</div><div>different heads of income, namely, (i) income from</div><div>commission (ii) unsecured loan from Dengzong Charitable</div><div>Trust (iii) interest accrued/paid on the unsecured loans</div><div>and (iv) provision for income tax (which was disallowed).</div><div>Separate penalty proceedings were initiated under</div><div>sections 271(1)(a). 271(1)(c), 273/274 and 271-B of the</div><div>Act.</div><div>2.12 The assessees then preferred appeals before the</div><div>CIT(A). Subsequently on 08th December, 2000, the writ</div><div>petitions filed by the assessees came to be dismissed by</div><div>the High Court as the respective assessees moved the</div><div>Appellate Authority prescribed under the statute. The</div><div>appeals preferred by the assessees before the CIT(A)</div><div>CA 5769/2022 Etc. Page 8 of 67</div><div>came to be dismissed vide order(s) dated 30th March,</div><div>2001.</div><div>2.13 Feeling aggrieved by the order(s) passed by the</div><div>CIT(A) dismissing the appeals, the respective assessees</div><div>preferred appeals before the ITAT. The ITAT observed</div><div>and held that notices under Section 148 of the Act could</div><div>not have been served on Mr. Rattan Gupta as the said Mr.</div><div>Rattan Gupta cannot be said to be a “Principal Officer” of</div><div>the assessees within the meaning of section 2(35)(a) of</div><div>the Act and the AO did not serve any notices of his</div><div>intention of treating Mr. Rattan Gupta as the “Principal</div><div>Officer” for the purposes of section 2(35)(b) of the Act. On</div><div>the refusal of Mr. Rattan Gupta to receive notices, ITAT</div><div>observed and opined that if Mr. Rattan Gupta refused to</div><div>receive such notices, he was justified in doing so and his</div><div>refusal did not authorise the AO to resort to substituted</div><div>service within the meaning of Rule 20 of Order V of CPC.</div><div>The order(s) passed by the ITAT allowing the appeals</div><div>preferred by the assessees was/were the subject matter</div><div>of appeals before the High Court at the instance of the</div><div>Revenue.</div><div>2.14 The High Court framed the following questions of</div><div>law:</div><div>“1. Whether the Tribunal was right in holding that the ACIT</div><div>exceeded his jurisdiction in issuing notices under section 148</div><div>CA 5769/2022 Etc. Page 9 of 67</div><div>of the Act and the notices were not served in accordance</div><div>with law?</div><div>2. Whether the order made by the ITAT is perverse based</div><div>on conjectures and surmises and ignorance of evidence and</div><div>material and has relied upon incorrect facts?</div><div>3. Whether the income of the assessee is taxable in India?”</div><div>At the instance of the Assessees, an additional question</div><div>was also framed as under by the same order:</div><div>4. Whether the ITAT was right in law in holding that the</div><div>assessee is not a resident of India within the meaning of</div><div>Section 6(3)(ii) of the Income Tax Act, 1961 and whether the</div><div>said finding of the ITAT is not also vitiated and perverse as it</div><div>ignores relevant admissible evidence and materials and</div><div>relies upon incorrect facts and has not given due</div><div>consideration to several important materials and evidence</div><div>relevant for determination of residence of the assessee.”</div><div><br /></div><div>2.15 By the impugned common judgment and order, the</div><div>High Court has answered all the questions in favour of the</div><div>Revenue and against the assessees and consequently</div><div>has allowed the appeals preferred by the Revenue. The</div><div>High Court in the impugned judgment and order has dealt</div><div>with and considered the following main issues and both</div><div>the parties were heard on the said issues.</div><div>1. Objection to the jurisdiction by the ACIT, Circle 7(1), New</div><div>Delhi who issued notices to the assessees under Section 148 of</div><div>the Act;</div><div>2. Control and management in New Delhi;</div><div>3. No income accrued or was earned in Sikkim;</div><div>4. Service of notice;</div><div>CA 5769/2022 Etc. Page 10 of 67</div><div>5. Limitation for issuance of notice under section 147 of the Act;</div><div>6. Merits of the reopening of the assessments; and</div><div>7. Interest</div><div>By the impugned common judgment and order, the</div><div>High Court has summarised the conclusion in paragraph</div><div>91 as under:</div><div>(i) The Assessees, incorporated under the company law of</div><div>Sikkim, are resident Indian companies. If any income</div><div>accrued to them or was earned by them in India prior to</div><div>1</div><div>st April 1990, then such income is taxable under the</div><div>Act.</div><div>(ii) The Revenue is justified in contending that the Assessees</div><div>not having raised such objection at the first available</div><div>opportunity should not be permitted to urge the ground of</div><div>lack of jurisdiction of the Delhi officers to issue notices to</div><div>them under Sections 147/148 of the Act.</div><div>(iii) Mr. Rattan Gupta was not only doing the audit work of the</div><div>five Assessee companies, but determining who should be</div><div>the directors of the said companies. This coupled with the</div><div>fact that the blank signed cheque books of all the five</div><div>companies together with rubber seals, the letter heads, the</div><div>blank signed cheques and other records were also found in</div><div>the office of Rattan Gupta & Co., the factual determination</div><div>by the AO that the management and the control of the five</div><div>companies was actually wholly situated in Delhi gets</div><div>fortified. The exhaustive evidence gathered by the</div><div>Revenue, without being countered by the Assessees</div><div>despite opportunity being afforded, serves to substantiate</div><div>the case of the Revenue that the management and the</div><div>control of the five Assessee companies was in fact located</div><div>in Delhi.</div><div>CA 5769/2022 Etc. Page 11 of 67</div><div>(iv) The findings of the AO that the Assessees failed to prove</div><div>that the commission payments were earned by them</div><div>exclusively in Sikkim has not been dislodged by the</div><div>Assessees by producing any tangible material.</div><div>(v) There was an implied authority of Mr. Rattan Gupta to</div><div>receive such notices even in terms of Section 252(2) of the</div><div>Act, read with Order V Rule 20 CPC. Consequently, the</div><div>Court is unable sustain the finding of the ITAT that notice</div><div>was not properly served on the Assessees through Rattan</div><div>Gupta & Co. There was no need for the Department to have</div><div>gone in for substituted service and the refusal by Rattan</div><div>Gupta & Co. to receive the notice was sufficient to consider</div><div>it as a deemed service of notice.</div><div>(vi) The plea of the Assessees that the proceedings under</div><div>Section 148 of the Act gets vitiated in the absence of a</div><div>specific order vesting the ACIT with the powers under</div><div>Section 127 of the Act to issue notice under Section 148 of</div><div>the Act is rejected.</div><div>(vii) The plea of the Assessees that the notices under Section</div><div>142(1) and 143(2) of the Act were issued for the first time in</div><div>1998 and were time barred is rejected.</div><div>(viii) On merits there were sufficient grounds for exercising the</div><div>power under Section 148 of the Act.</div><div>(ix) The ITAT's conclusion that the interest under Sections 234</div><div>A and 234 B of the Act could not be charged since a</div><div>specific notice in that behalf was not issued by the AO is</div><div>unsustainable in law and is overruled.”</div><div>Concluding as above, the High Court has</div><div>accordingly answered the questions framed in favour of</div><div>the Revenue and against the assessees. The impugned</div><div>CA 5769/2022 Etc. Page 12 of 67</div><div>common judgment and order passed by the High Court is</div><div>the subject matter of present appeals.</div><div>Submissions:</div><div>3. Shri Arvind P Datar and Shri G. Umapathy, learned</div><div>senior counsel have appeared on behalf of the respective</div><div>assessee companies and Shri N. Venkataraman, learned</div><div>Additional Solicitor General of India has appeared on</div><div>behalf of the Revenue.</div><div>3.1 Shri Arvind P Datar, learned senior counsel</div><div>appearing on behalf of the assessee companies has</div><div>submitted that the issue involved in the present appeals</div><div>is, as to whether the provisions of Income Tax Act, 1961</div><div>shall be applicable to the assessee companies which are</div><div>registered under the Sikkim Companies Act and amenable</div><div>to Sikkim Tax Manual, 1948 in respect of three</div><div>Assessment Years, i.e., 1987-88, 1988-89 and 1989-90</div><div>when Income Tax Act, 1961 was not extended to the State</div><div>of Sikkim. It is submitted that the further issue is, whether</div><div>jurisdiction on the authorities in Delhi can be conferred</div><div>solely based on the alleged effective place of control and</div><div>management of the assessee companies for the purpose</div><div>of applicability of Income Tax Act, 1961.</div><div>CA 5769/2022 Etc. Page 13 of 67</div><div>3.2 Challenging the impugned judgment and order</div><div>passed by the High Court, Shri Arvind P Datar, learned</div><div>senior counsel appearing on behalf of the assessee</div><div>companies has vehemently submitted that the impugned</div><div>judgment is based on an erroneous assumption that the</div><div>effective control of the companies vested with one Mr.</div><div>Rattan Gupta, a resident of Delhi, who was rendering</div><div>accounting and auditing services.</div><div>3.3 It is submitted that the impugned judgment has</div><div>erroneously allowed the Department to levy interest on</div><div>the assessee companies without framing the issue as a</div><div>specific question of law as mandated by Section 260A of</div><div>the Act.</div><div>3.4 In support of his submission that the Income Tax</div><div>Act, 1961 shall not be applicable for the period during the</div><div>relevant assessment years, it is vehemently submitted by</div><div>Shri Datar, learned senior counsel appearing on behalf of</div><div>the assessee companies that the Income Tax Act, 1961</div><div>came to be extended to the State of Sikkim only on and</div><div>after 1st April, 1990. That therefore, the AO exceeded his</div><div>jurisdiction.</div><div>3.5 It is contended that the assessee companies having</div><div>been assessed to tax under the Sikkim Manual, 1948 and</div><div>having paid and discharged income tax under the said law</div><div>CA 5769/2022 Etc. Page 14 of 67</div><div>cannot be subjected to tax once over again by applying</div><div>the “head and brain” rule in the absence of an express</div><div>provision under the Income Tax Act, 1961, more so in</div><div>view of the well settled law that “a taxing statute should</div><div>not be interpreted in such a manner that its effect will be</div><div>to cast a burden twice over for the payment of tax on the</div><div>taxpayers unless the language of the statute is so</div><div>compelling that the Court has no alternative than to</div><div>accept it.” That in a case of reasonable doubt, the</div><div>construction most beneficial to the taxpayer is to be</div><div>adopted.</div><div>3.6 It is further contended that as such the present case</div><div>is squarely covered by the decision of this Court in the</div><div>case of Mahaveer Kumar Jain v. CIT, Jaipur, reported</div><div>in (2018) 6 SCC 527, wherein this Court considered a</div><div>question whether the appellant, who was a resident of</div><div>Rajasthan and had won a lottery from Sikkim during the</div><div>Assessment Year 1986-87 was liable to be taxed in India</div><div>where Income Tax Act, 1961 was in force, notwithstanding</div><div>that the said income had accrued or arisen to him at a</div><div>place where Income Tax Act, 1961 was not in force, i.e.,</div><div>Sikkim, more particularly when the said income had</div><div>already been taxed in the State of Sikkim under the</div><div>Sikkim Manual, 1948. Reliance is placed on certain</div><div>CA 5769/2022 Etc. Page 15 of 67</div><div>observations made in paragraphs 13 to 15 of the said</div><div>decision.</div><div>3.7 It is next submitted that the assessee companies</div><div>filed income tax returns before the appropriate authority</div><div>as per Sikkim Manual, 1948 and a demand was raised by</div><div>the said authority, which was paid. That the fact that the</div><div>appropriate Income Tax Authority under the Sikkim</div><div>Manual, 1948 accepted the income tax returns filed by the</div><div>assessee companies and raised demand based on such</div><div>returns establish the bona fides of the assessee</div><div>companies beyond reproach. Therefore, the allegation</div><div>that the assessee companies have no real business in</div><div>Sikkim is absolutely baseless, unfounded and untenable.</div><div>3.8 Making above submissions, it is urged that the</div><div>Income Tax Act, 1961 shall not be made applicable so far</div><div>as the assessee companies are concerned for the</div><div>relevant assessment years.</div><div>3.9 It is further submitted that as such the ACIT, Delhi</div><div>had no territorial jurisdiction to assess the assessee</div><div>companies and therefore clearly exceeded in his</div><div>jurisdiction in issuing notices under section 148 of the Act</div><div>on the assumption that the assessee companies were</div><div>carrying on business in India, on the basis of availability of</div><div>books of accounts of the assessee companies at the</div><div>CA 5769/2022 Etc. Page 16 of 67</div><div>premises of the Chartered Accountant of the assessee</div><div>companies, i.e., M/s Rattan Gupta & Co. It is submitted</div><div>that such an approach is wholly untenable in law, besides</div><div>being perverse.</div><div>3.10 It is further submitted that as observed and held by</div><div>this Court in the cases of Ajay Kumar v. State of</div><div>Uttarakhand, 2021 SCC OnLine SC 48 and Kiran Singh</div><div>v. Chaman Paswan, AIR 1954 SC 340, an order passed</div><div>by the authority without jurisdiction is a nullity.</div><div>3.11 It is contended that the exercise of territorial</div><div>jurisdiction by CIT, Delhi is also wholly untenable in law in</div><div>view of section 6(3) of the Act as it was at the relevant</div><div>point of time. That Mr. Rattan Gupta was a practising</div><div>Chartered Accountant and providing accounting and</div><div>auditing services to several corporates and individuals</div><div>and could have never been the “head and brain” behind</div><div>the assessee companies.</div><div>3.12 It is further contended that even otherwise the reassessment was impermissible in law in the absence of</div><div>any original orders passed under section 143(3) of the</div><div>Act. Reliance is placed on the decision of this Court in the</div><div>case of trustees of H.E.H, the Nizam’s Supplemental</div><div>Family Trust v. CIT, reported in (2000) 3 SCC 501</div><div>(paragraphs 10 & 11). It is submitted that the said</div><div>CA 5769/2022 Etc. Page 17 of 67</div><div>decision was subsequently followed and affirmed by this</div><div>Court in the case of Standard Chartered Finance</div><div>Limited v. CIT, Bangalore, (2016) 14 SCC 634 (Civil</div><div>Appeal No. 1101 of 2016 dated 9.2.2016).</div><div>3.13 It is further submitted by Shri Datar, learned senior</div><div>counsel appearing on behalf of the assessee companies</div><div>that as such there was no material to substantiate that the</div><div>assessee companies’ control and management was</div><div>situated wholly in India. That the High Court has</div><div>proceeded on an erroneous presumption that the</div><div>assessee companies were controlled by one Rattan</div><div>Gupta, who was rendering accounting and auditing</div><div>services, simply because books of accounts had been</div><div>found in his office. It is submitted that no evidence was</div><div>produced to the effect that he ever appointed any person</div><div>as the Director of the assessee companies or dictated the</div><div>manner in which such Directors were to discharge duties</div><div>towards assessee companies. That the finding of the</div><div>High Court that the control over management vested with</div><div>Rattan Gupta and therefore the assessee companies</div><div>were situated in India, is therefore wholly untenable and</div><div>consequently to draw such presumption is legally</div><div>unsustainable.</div><div>CA 5769/2022 Etc. Page 18 of 67</div><div>3.14 It is further submitted that there was no cogent</div><div>material at the time of issuance of notices under section</div><div>148 of the Act to form a belief that income was chargeable</div><div>under the Income Tax Act, 1961 and that the burden to</div><div>prove that the control and management of assessee</div><div>companies was situated wholly in India lie with the</div><div>Department. That the law is well settled that the onus</div><div>was on the Revenue, which has not been discharged.</div><div>That on the contrary the High Court has erred in shifting</div><div>the onus on the assessee companies to prove that they</div><div>had legitimate business interest and income arising from</div><div>the State of Sikkim.</div><div>3.15 It is contended that the impugned order is based</div><div>solely on an erroneous supposition that Mr. Rattan Gupta</div><div>was in control of the management of the assessee</div><div>companies. That as such until the Assessment Years</div><div>1988-89, the audit and accounts of the assessee</div><div>companies were being handled by one Ravinder Singh &</div><div>Co. That the High Court has committed an error in</div><div>treating the said Ravinder Singh to be the partner of M/s</div><div>Rattan Gupta & Co. It is submitted that therefore, the</div><div>impugned order is based on a flawed presumption of a</div><div>critical fact and therefore the impugned judgment</div><div>deserves to be set aside by this Court.</div><div>CA 5769/2022 Etc. Page 19 of 67</div><div>3.16. Shri Datar further submitted that in the absence of</div><div>framing of any substantial question of law under Section</div><div>260A of the Act on levy of interest, the liability of interest</div><div>could not have been fastened upon the assessee</div><div>companies. That section 260A of the Income Tax Act is</div><div>analogous to Section 100 CPC which mandates framing</div><div>of question of law before exercising its jurisdiction on the</div><div>said issue. It is submitted that as such no issue of levy of</div><div>interest was framed by the High Court. That therefore the</div><div>High Court has committed a jurisdictional error in</div><div>recording a finding that ITAT’s conclusion that interest</div><div>under section 234 A & B of the Act could not be charged</div><div>since a specific notice in that behalf was not issued by the</div><div>Assessing Officer, is unsustainable in law.</div><div>3.17 In addition, it is submitted on the aspect on territorial</div><div>jurisdiction of the authorities at Delhi that the assessee</div><div>companies were having their registered offices in Sikkim.</div><div>Therefore, the issuance of notices under Section 148 of</div><div>the Act is beyond jurisdiction. That on the issue of</div><div>territorial jurisdiction, the ITAT found that since the</div><div>business premises of the assessees were in Sikkim, the</div><div>territorial jurisdiction to assess vested with the ACIT,</div><div>Gangtok. Therefore, the ITAT rightly held that the ACIT</div><div>Delhi who issued notices under section 148 of the Act had</div><div>CA 5769/2022 Etc. Page 20 of 67</div><div>no territorial jurisdiction. That the proper course for the</div><div>Department was to have the matter entrusted to ACIT,</div><div>Gangtok after complying with the mandate of section 127</div><div>of the Act for transferring jurisdiction of ACIT, Gangtok to</div><div>New Delhi. It is submitted that though the Revenue in its</div><div>appearance before the High Court raised a question of</div><div>law on the finding recorded by the ITAT on territorial</div><div>jurisdiction of the authorities at Delhi, while framing</div><div>question(s) of law, the High Court did not frame an issue</div><div>with regard to territorial jurisdiction. Thus, the finding with</div><div>regard to lack of territorial jurisdiction by ITAT had attained</div><div>finality.</div><div>3.18 Insofar as the levy of interest is concerned, it is</div><div>submitted that the ITAT specifically observed that no</div><div>direction was made by the AO for levy of interest.</div><div>Therefore relying upon the decision of this Court in the</div><div>case of CIT v. Ranchi Club Limited, (2001) 247 ITR 209</div><div>taking the view that levy of interest was under Section</div><div>234A, B & C of the Act, without a direction by the AO in</div><div>the assessment order is not legally sustainable. It is</div><div>further submitted that the High Court, while upsetting the</div><div>finding recorded by the ITAT on levy of interest, has erred</div><div>in relying upon the decisions of this Court in the cases of</div><div>Commissioner of Income Tax, Mumbai v. Anjum M.H.</div><div>CA 5769/2022 Etc. Page 21 of 67</div><div>Ghaswala, (2002) 1 SCC 633 and Commissioner of</div><div>Income Tax, Delhi v. Bhagat Construction Company</div><div>Private Limited, (2016) 15 SCC 738.</div><div>3.19 Shri Datar, learned senior counsel appearing on</div><div>behalf of the assessee companies contended that as such</div><div>there was no notice served upon the proper person and</div><div>the notice served upon Rattan Gupta cannot be said to be</div><div>a valid service of notice. That under section 2(35)(b) of</div><div>the Act, the Assessing Officer is required to serve a notice</div><div>only on persons who are connected with the management</div><div>or administration of the assessee company to treat them</div><div>as Principal Officer. That Rattan Gupta was never</div><div>connected with the management or administration of the</div><div>assessee companies so as to treat him as a Principal</div><div>Officer. That Rattan Gupta was not the Secretary,</div><div>Treasurer, Manager or Agent of the assessee companies</div><div>under section 2(35)(a) of the Act. Therefore, the AO</div><div>ought to have served a notice on Rattan Gupta informing</div><div>him of his intention to treat him as the Principal Officer of</div><div>the assessee companies on the ground that he was a</div><div>person connected with the management or administration</div><div>of the assessee companies under section 2(35)(b) of the</div><div>Act. However, in the present case, the AO never served a</div><div>notice on Rattan Gupta under section 2(35)(b) of the Act</div><div>CA 5769/2022 Etc. Page 22 of 67</div><div>expressing his intention to treat him as the Principal</div><div>Officer of the assessee companies. Therefore, this failure</div><div>vitiates the entire proceedings.</div><div>3.20 It is submitted that there is adequate evidence on</div><div>record to establish that:</div><div>(a)the business was managed from Gangtok in Sikkim</div><div>where the business was carried on by one Mr. Ajay</div><div>Kumar Agarwal, Local Director and Mr. H.L. Verma,</div><div>(b)the income was earned and assessed to income tax</div><div>in Sikkim as per the Sikkim Manual, 1948, and</div><div>(c)income tax was paid in Sikkim under Sikkim</div><div>Manual, 1948.</div><div>3.21 That further, seized vouchers and records clearly</div><div>establish that commission payments were received into</div><div>the bank accounts of these companies from identified</div><div>traders of large cardamom and that department had no</div><div>material in its possession to disbelieve that these traders</div><div>had made the commission payments only on sale of</div><div>cardamom.</div><div>3.22 It is submitted that books of accounts, ledgers etc.</div><div>which were found at the office premises of Mr. Rattan</div><div>Gupta’s office at Daryaganj, Delhi were handed over to</div><div>Mr. Rattan Gupta for providing professional accounting</div><div>services as he was a practising Chartered Accountant.</div><div>CA 5769/2022 Etc. Page 23 of 67</div><div>He had clearly stated that the books of accounts, ledgers</div><div>etc. were handed over to him for providing professional</div><div>services and that the business operations were carried</div><div>out from Gangtok in Sikkim by Mr. Ajay Kumar Agarwal,</div><div>Local Director and Mr. H.L. Verma and that he had</div><div>nothing to do with the business operations of the</div><div>assessee companies. A mere allegation that he is in</div><div>charge of the conduct of the company is not sufficient to</div><div>hold that he is the Principal Officer. There should be</div><div>credible material to how his active involvement in the</div><div>conduct and management of the business.</div><div>3.23 It is next submitted that assumption of jurisdiction</div><div>based on the seizure of books of accounts from the office</div><div>premises of the practising Chartered Accountant Mr.</div><div>Rattan Gupta at New Delhi and treating him as the</div><div>Principal Officer or “head and brain” of the companies</div><div>incorporated under the Sikkim Companies Registration</div><div>Act, 1961 when the said Chartered Accountant had</div><div>categorically stated on oath that he was rendering</div><div>professional accounting and reconciliation services to the</div><div>companies in question, is without jurisdiction, perverse</div><div>and deserves to be set aside. The failure of same would</div><div>set a very bad precedent and have far reaching</div><div>CA 5769/2022 Etc. Page 24 of 67</div><div>consequences on the rights of Chartered Accountants to</div><div>carry on their profession.</div><div>3.24 Making above submissions and relying upon the</div><div>aforesaid decisions, it is prayed that the present appeals</div><div>be allowed.</div><div>4. The present appeals are vehemently opposed by</div><div>Shri N. Venkataraman, learned Additional Solicitor</div><div>General of India appearing on behalf of the Revenue. He</div><div>has taken us through the findings recorded by the</div><div>Assessing Officer in the Assessment Order, findings of the</div><div>CIT(A) vide order dated 30th March, 2001, findings</div><div>recorded by the ITAT vide order dated 8th January, 2002</div><div>and the findings recorded by the High Court including the</div><div>findings recorded regarding the issue pertaining to service</div><div>of notice and levy of interest.</div><div>4.1 Insofar as the submission on behalf of the</div><div>appellants on control and management of affairs of the</div><div>companies is concerned, it is submitted that section 6 of</div><div>the Act defines residence in India. That the relevant</div><div>provision is section 6(3) of the Act. That this principle of</div><div>control and management of its affairs is not something</div><div>which had originated for the first time in the Income Tax</div><div>Act, 1961. This expression had existed even under the</div><div>Income Tax Act, 1922. It is submitted that under the</div><div>CA 5769/2022 Etc. Page 25 of 67</div><div>erstwhile Income Tax Act, 1922, Section 4A defined</div><div>residence in taxable territories. Section 6 of the Act deals</div><div>with residence in India and the relevant provision would</div><div>be Section 6(3) pre-amendment in 2017 and postamendment 2017 w.e.f. 01.04.2017. He has taken us</div><div>through the relevant provisions under the Income Tax Act,</div><div>1922 (Section 4A), Section 6(3) of the Act (existed prior to</div><div>01.04.2017) and Section 6(3) of the Act substituted by</div><div>Finance Act w.e.f. 01.04.2017.</div><div>4.2 On the interpretation on the control and</div><div>management of affairs, Shri N. Venkataraman, learned</div><div>ASG has relied upon the following English, Supreme</div><div>Court and High Court judgments both under the Act, 1922</div><div>and Act, 1961:</div><div>i) San Paulo v. Carter (1896) AC 31 Lord</div><div>Halsbury;</div><div>ii) V.V.R.N.M. Subbayya Chettiar v. CIT, Madras,</div><div>AIR 1951 SC 101;</div><div>iii) Erin Estate v. CIT, 1959 SCR 573;</div><div>iv) Narottan and Pereira Ltd. v. CIT, Bombay City,</div><div>1953 23 ITR 454 (paragraphs 3 & 4) (Bombay High</div><div>Court Judgment);</div><div>CA 5769/2022 Etc. Page 26 of 67</div><div>v) Estate of A. Mohammed Rowther v. CIT,</div><div>Madras, 1963 49 ITR 39, (Madras High Court</div><div>Judgment);</div><div>vi) CIT v. Chitra Palayakat Co., 1985 156 ITR 730</div><div>(Madras High Court Judgment);</div><div>vii) Commissioner of Income Tax v. Nandlal</div><div>Gandalal, 1960 40 ITR 1 (SC);</div><div>viii)A.M.M. Firm v. Reserve Bank of India, 1982 SCC</div><div>OnLine Mad. 187 (Madras High Court Judgment);</div><div>ix) Commissioner of Income Tax v. Bank of China,</div><div>1985 SCC OnLine Cal. 24 (Calcutta High Court</div><div>Judgment); and</div><div>x) Universal Cargo Carriers Inc. v. Commissioner</div><div>of Income Tax, 1990 SCC OnLine Cal. 385 (Calcutta</div><div>High Court Judgment)</div><div>4.3 Relying upon the aforesaid decisions, it is submitted</div><div>as under:</div><div>a) Holding lands, receipt of payments and carrying on</div><div>trade is of no consequence as long as the control of the</div><div>commercial venture and directions governing the</div><div>commercial venture are given from elsewhere.</div><div>CA 5769/2022 Etc. Page 27 of 67</div><div>b) Domicile or registration of the company is not</div><div>relevant. The making, maintaining, managing and</div><div>working is insufficient.</div><div>c) Directors authorised to manage the work and</div><div>employees rendering service again are insufficient.</div><div>d) The determinative test is where the sole right to</div><div>manage and control every department of its affairs lies.</div><div>Managers and directors whose services are merely</div><div>remunerated is not a relevant criterion. The profits</div><div>although received by the employees as remuneration,</div><div>do not belong to them and are not in their disposal.</div><div>Incurring of debts or payment to agents are of no</div><div>consequence.</div><div>e) The test is, where the head and seat and directing</div><div>power of the affairs of the company is, which works with</div><div>some degree of permanence while the expression</div><div>‘wholly’ would seem to recognize the possibility of the</div><div>seat of such power being divided between two distinct</div><div>and separate places.</div><div>f) The question to be asked is from where the person</div><div>or group of persons control or direct the business.</div><div>g) Mere activity by the company does not create</div><div>residence.</div><div>CA 5769/2022 Etc. Page 28 of 67</div><div>h) In case of dual residence, it is necessary to show</div><div>that the company performs some of the vital organic</div><div>functions incidental to its existence in both the places</div><div>so that there are in fact two centres of management.</div><div>i) Control and management which must be shown is</div><div>not merely theoretical control and power, or de jure</div><div>control and power but the de facto control and power</div><div>actually exercised in the course of the conduct and</div><div>management of the affairs of the firm. Mere presence</div><div>of directors or vesting of power in them is insufficient</div><div>unless otherwise they had exercised the power</div><div>elsewhere in the territory under question.</div><div>j) Even acting under a power of attorney is not</div><div>sufficient as the same can be cancelled at any moment</div><div>and as a power of attorney holder they must submit to</div><div>the principal an explanation of what they have been</div><div>doing and the principal has the right of keeping a</div><div>vigilant eye over their work from the board room and the</div><div>power exercised by the power of attorney holder is only</div><div>de jure control and not de facto control and</div><div>management.</div><div>k) The intrinsic test is where the central control and</div><div>management actually abides. Mere presence of even</div><div>CA 5769/2022 Etc. Page 29 of 67</div><div>the managing partner or mere delegation of power is</div><div>insufficient.</div><div>l) The expression control and management of its</div><div>affairs is much wider than the expression used in some</div><div>treatises ‘Control and Management of the business.’</div><div>4.4 It is further submitted that in light of the principles</div><div>laid down in the aforesaid decisions, it is well settled that</div><div>a question, as to where the control and management lies</div><div>is to be decided in light of the actual or the factual</div><div>exercise of control, inasmuch as the Courts consistently</div><div>have taken the view that mere presence of a partner firm</div><div>in India even when he happens to be the managing</div><div>partner, is not conclusive of the issue.</div><div>4.5 It is further submitted that to cull out the meaning of</div><div>management and control under the old Section 6(3) preamendment 2017, which shall be applicable in the present</div><div>case, section 6(3) post 1st April, 2017 is also required to</div><div>be considered. That the test under the new law post 1st</div><div>April, 2017 is “Key management and commercial</div><div>decisions necessary for the conduct of the business as a</div><div>whole or in substance.” It is submitted that the place of</div><div>effective management (POEM) is the new standard</div><div>CA 5769/2022 Etc. Page 30 of 67</div><div>prescribed by the Parliament, w.e.f. 1st April, 2017, in</div><div>alignment with the global needs and business practices.</div><div>4.6 Taking us to the findings recorded by the AO, CIT(A)</div><div>and the High Court which are on appreciation of</div><div>evidence/material on record, it is vehemently submitted by</div><div>Shri N. Venkataraman, learned ASG that it was rightly</div><div>concluded that the control and management of the</div><div>companies was in Delhi and that it was a clear design on</div><div>the part of the respective assessees to treat the income</div><div>as arising from Sikkim to avoid the payment of tax under</div><div>the Act, 1961. It is submitted that the control and</div><div>management of the companies was being done by Rattan</div><div>Gupta from his Delhi office. Therefore, the assessees can</div><div>be said to be residence in India and therefore liable to pay</div><div>tax under the Income Tax Act, 1961.</div><div>4.7 Insofar as the submission on behalf of the</div><div>appellants that in the absence of any original assessment,</div><div>there shall not be any re-assessment under sections</div><div>147/148 of the Act, Shri N. Venkataraman, learned ASG</div><div>has heavily relied upon the decision of this Court in the</div><div>case of Commissioner of Income Tax v. Sun</div><div>Engineering Works P. Ltd. (1992) 4 SCC 363</div><div>(paragraph 14). It is submitted that in the said decision, it</div><div>is observed and held by this Court that under section 147,</div><div>CA 5769/2022 Etc. Page 31 of 67</div><div>the AO has been vested with the power to ‘assess or</div><div>reassess’ the escaped income of an assessee. That the</div><div>term ‘escaped assessment’ includes both “nonassessment” as well as “under assessment.”</div><div>4.8 Insofar as the submission on behalf of the</div><div>appellants on service of notice is concerned, it is</div><div>submitted that the principal place of business is the seat</div><div>of control and therefore notice sent to Delhi is sufficient.</div><div>On the service of notice at Delhi, Shri N. Venkataraman,</div><div>learned ASG has heavily relied upon the</div><div>observations/findings recorded by the High Court in the</div><div>impugned judgment and order in paragraphs 78 to 83.</div><div>Thereafter, relying upon the decision of the Calcutta High</div><div>Court in the case of India Glycols Ltd. v.</div><div>Commissioner of Income Tax, 2004 SCC OnLine Cal.</div><div>736, it is submitted that notices sent/served at Delhi can</div><div>be said to be valid notice/service.</div><div>4.9 As regards levy of interest under Section 234A of</div><div>the Act is concerned, it is urged by Shri N. Venkataraman,</div><div>learned ASG that interest levied under Section 234A is</div><div>mandatory and there is no discretion with the AO and</div><div>therefore there is no question of non-compliance of</div><div>principles of natural justice. It is submitted that so far as</div><div>the penalty leviable under section 271 of the Act is</div><div>CA 5769/2022 Etc. Page 32 of 67</div><div>concerned, the same is discretionary, however the interest</div><div>is not discretionary. Therefore, for imposing penalty,</div><div>principles of natural justice are required to be complied</div><div>with, however in case of interest, the same being</div><div>mandatory in nature and automatic there is no</div><div>requirement of following principles of natural justice and/or</div><div>even if in the assessment order there is no specific order</div><div>to levy the interest but the interest charged is indicated in</div><div>the ITNS 150 accompanying the assessment order and</div><div>the same would be sufficient compliance for demanding</div><div>interest. Heavy reliance is placed on the Constitution</div><div>Bench decision of this Court in the case of Anjum M.H.</div><div>Ghaswala (supra) as well as subsequent decision in the</div><div>case of Karanvir Singh Gossal v. Commissioner of</div><div>Income Tax, (2012) 13 SCC 802 and the decision of this</div><div>Court in the case of Bhagat Construction Company</div><div>Private Limited (supra).</div><div>4.10 It is submitted that the ITAT has relied upon the</div><div>decision of this Court in the case of Ranchi Club Ltd.</div><div>(supra). However, the said decision has been</div><div>subsequently overruled and/or held not to be good law in</div><div>view of the subsequent decisions in the cases of Anjum</div><div>M.H. Ghaswala (supra) and Bhagat Construction</div><div>Company Private Limited (supra).</div><div>CA 5769/2022 Etc. Page 33 of 67</div><div>4.11 Insofar as the submission regarding non-framing of</div><div>the substantial question of law on levy of interest is</div><div>concerned, heavy reliance is placed on the decision of</div><div>this Court in the case of State Bank of India v. S.N.</div><div>Goyal, (2008) 8 SCC 92 (paragraph 13). It is submitted</div><div>that as observed and held by this Court in the aforesaid</div><div>decision, when a question of law arises incidentally or</div><div>collaterally, having no bearing on the final outcome, it will</div><div>not be a substantial question of law. It is submitted that in</div><div>the present case, the Constitution Bench in Anjum M.H.</div><div>Ghaswala (supra) has held that the interest is both</div><div>mandatory and automatic and the decision of this Court</div><div>and various High Courts had concluded that it does not</div><div>require a separate notice, hearing and an independent</div><div>order. It is submitted that this Court in the case of Bhagat</div><div>Construction Company Private Limited (supra) had in</div><div>no uncertain terms made the legal position clear by</div><div>holding that should the assessing authority enclose an</div><div>ITNS 150 form computing the interest liability and</div><div>annexed the same with the assessment order, the same</div><div>would constitute adequate compliance for sustaining the</div><div>interest and upholding it. That the aforesaid judgment</div><div>makes it evidently clear that when an issue is incidental or</div><div>collateral then it does not give rise to a substantial</div><div>CA 5769/2022 Etc. Page 34 of 67</div><div>question of law. Once the tax liability is upheld, interest</div><div>become automatic, mandatory and collateral.</div><div>4.12 It is next submitted that the final outcome of the tax</div><div>liability or the final outcome of the substantial questions</div><div>raised and decided by the High Court, had been decided</div><div>without any sense of dependence on the issue of interest.</div><div>That the final legal outcome of the substantial questions</div><div>raised and decided is not dependent or contingent upon a</div><div>decision on interest. On the contrary, the moment the tax</div><div>liability gets upheld, if the AO had imposed interest at the</div><div>first instance, (which in this case is not under dispute)</div><div>then interest would get added to the tax liability as it does</div><div>not require an independent and stand alone consideration</div><div>as to whether the same is leviable.</div><div>4.13 As regards the reliance placed upon the decision of</div><div>this Court in the case of Shiv Raj Gupta v. CIT, Delhi,</div><div>AIR 2020 SC 3556, by the learned senior counsel</div><div>appearing on behalf of the appellants on non-framing of</div><div>substantial question of law in terms of Section 260A of the</div><div>Act so far as the interest liability is concerned, it is</div><div>submitted that the said decision shall not be applicable to</div><div>the facts of the case at hand and more particularly in case</div><div>of an interest which is automatic and mandatory. It is</div><div>submitted that in the said case, the dispute was with</div><div>CA 5769/2022 Etc. Page 35 of 67</div><div>respect to capital gains which by its very nature is a</div><div>separate head of income and the issue relates to the very</div><div>taxability. That therefore, failure to raise a question of</div><div>taxability of capital gains in a particular case may</div><div>tantamount to a failure in raising a substantial question of</div><div>law in terms of Section 260A of the Act. However, the</div><div>same may not apply on interest as the interest is</div><div>automatic and mandatory.</div><div>4.14 Making above submissions and relying upon the</div><div>aforesaid decisions, it is prayed that the present appeals</div><div>be dismissed.</div><div>Consideration:</div><div>5. We have heard learned counsel for the respective</div><div>parties at length.</div><div>We have also gone through the orders passed by</div><div>the Assessing Officer, CIT(A), ITAT and the impugned</div><div>judgment and order passed by the High Court in great</div><div>detail.</div><div>At the outset, it is required to be noted that the AO</div><div>held against the respective assessees on all points</div><div>including Rattan Gupta being the main person in</div><div>management and control of the respective companies</div><div>CA 5769/2022 Etc. Page 36 of 67</div><div>situated in Delhi as well as the jurisdiction of the AO in</div><div>Delhi. The findings shall be referred to hereinbelow. The</div><div>findings recorded by the AO have been upheld by the</div><div>CIT(A), which are also against the respective assessees.</div><div>However, the ITAT reversed the order passed by the</div><div>CIT(A), which order has been reversed by the High Court</div><div>by holding that the decision of the ITAT is perverse both,</div><div>on facts and in law.</div><div>6. While appreciating the correctness of the impugned</div><div>judgment and order passed by the High Court and while</div><div>appreciating the submissions made by the learned</div><div>counsel appearing for the respective parties, the findings</div><div>recorded by the AO, CIT(A), ITAT and the High Court in</div><div>the impugned judgment and order are required to be</div><div>referred to, which are as under:</div><div>Findings record by the AO while passing the</div><div>Assessment Order:</div><div>i) The directors are all from outside Sikkim and had</div><div>never been to Sikkim, and the lone director Mr.</div><div>Ajay Agarwal was projected as a resident of</div><div>Gangtok, Sikkim, which could not be sustained</div><div>as no proof or identity was shown;</div><div>CA 5769/2022 Etc. Page 37 of 67</div><div>ii) The entire books of accounts were found and</div><div>seized at New Delhi at the address of Mr. Rattan</div><div>Gupta, Chartered Accountant, 4556/4, Ansari</div><div>Road, Darya Ganj, New Delhi. Returns were filed</div><div>without audit reports and auditors have not</div><div>signed balance sheets and the auditors were</div><div>also based out of Delhi. Though bank accounts</div><div>were available both in Delhi and Sikkim, the</div><div>authorized signatories, to operate both the</div><div>accounts were located only in Delhi;</div><div>iii) The statutory books, registers and the</div><div>shareholders were all located in Delhi;</div><div>iv) No evidence was ever produced for having</div><div>conducted board meetings in Sikkim;</div><div>v) When it came to earning of commission from</div><div>various agents, the genuineness of the</div><div>addresses given at Sikkim could not be proved.</div><div>When notices were issued under Section 131 of</div><div>the Act, no response was forthcoming and, from</div><div>the memorandum and articles of association it</div><div>was clear that the agents were kith and kin of the</div><div>directors;</div><div>vi) Shockingly, the total commission alleged to have</div><div>been earned was more than the sale of</div><div>CA 5769/2022 Etc. Page 38 of 67</div><div>cardamom and what could have been produced</div><div>by the State of Sikkim in a year. These facts</div><div>have been corroborated by the intelligence wing</div><div>of the department;</div><div>vii) There were no employees and no expenses</div><div>incurred at Sikkim;</div><div>viii) At the time of search and seizure on 15.03.1990</div><div>at the premises of Mr. Rattan Gupta & Co., the</div><div>following things were seized:</div><div>1) Books of accounts</div><div>2) Funds</div><div>3) Memorandum and Articles of Association</div><div>4) Blank cheque books of the bank accounts</div><div>held both in New Delhi, Gangtok and Sikkim</div><div>5) Pass books of all the 5 companies both Delhi</div><div>and Gangtok</div><div>6) Blank printed letter pads and rubber stamps</div><div>ix) Mr. Rattan Gupta in his statement dated 15th</div><div>March, 1990, confirmed that as part of</div><div>reconciliation, the persons contacted were</div><div>Dalmia Resorts International Private Limited and</div><div>Gujarat Heavy Chemicals Limited and other</div><div>entities. He further confirmed that Mr. Rajiv Jain</div><div>became a director in 3 companies on his</div><div>CA 5769/2022 Etc. Page 39 of 67</div><div>instructions and he had also made directors in all</div><div>the 5 Sikkim companies and named a few of</div><div>them. It was conceded clearly that though these</div><div>persons became directors at his behest no work</div><div>was performed by these persons except signing</div><div>papers;</div><div>x) Mr. Rajiv Jain in his statement dated 15th March,</div><div>1990 confirmed that cheque books and pass</div><div>books were found at the office of Mr. Rattan</div><div>Gupta and so is the case with rubber stamps</div><div>and blank printed letter heads;</div><div>xi) Mr. Ravinder Singh in his statement confirmed</div><div>that he had been looking after the day-to-day</div><div>affairs of these companies from Delhi till March,</div><div>1998, after which Rattan Gupta took over the</div><div>position as the only director and the other</div><div>directors were his nominees, and Rattan Gupta</div><div>functioned and operated only from Delhi and no</div><div>office expenses have been incurred in Sikkim;</div><div>xii) The AO also entered a finding that there has</div><div>been a fund transfer from Delhi into the bank</div><div>accounts at Sikkim to claim exemption and these</div><div>have been round tripping of money going from</div><div>CA 5769/2022 Etc. Page 40 of 67</div><div>Delhi to Sikkim and getting remitted back into</div><div>Delhi and claiming exemption in Sikkim; and</div><div>xiii) This was done till 31st March, 1989 and the</div><div>moment Income Tax Act was extended in 1990</div><div>the whole apparatus erased and no commission</div><div>was shown by any of the companies.</div><div>Findings recorded by the CIT(A):</div><div>1) That the appellate authority upheld the findings of</div><div>the AO, more specifically regarding commission</div><div>alleged to have been received by reiterating that</div><div>the summons sent to different persons who had</div><div>allegedly paid amounts as commission had not</div><div>responded to him and that the assessees had also</div><div>not produced any worthwhile evidence to prove the</div><div>genuineness of commission received.</div><div>2) That even U.P. Karma was examined on 8th</div><div>October, 1998 and he confirmed that he had joined</div><div>in 1998 and had no idea of earlier annual general</div><div>body meetings and could not produce any minutes.</div><div>He also confirmed that he did not have any idea</div><div>about the business in which all the 5 companies</div><div>were involved earlier. That he is a working director</div><div>CA 5769/2022 Etc. Page 41 of 67</div><div>claiming that he had never visited Gangtok, which</div><div>shows that Sikkim has been merely used without</div><div>actual rendition of any affairs.</div><div>3) As regards the charging of interest, the CIT(A)</div><div>gave a finding that the interest was charged as per</div><div>the workings mentioned in ITNS 150 which was</div><div>forming part of the assessment order, which is</div><div>sufficient and good enough to uphold interest in</div><div>terms of the decision of this Court.</div><div>Findings recorded by the ITAT:</div><div>1) After confirming the fact that the notices were</div><div>dispatched only in the name of the respective</div><div>companies in c/o Rattan Gupta, Chartered</div><div>Accountant, it was observed that Rattan Gupta</div><div>would not qualify as a principal officer within the</div><div>meaning of section 2(35)(a) of the Act. At this</div><div>stage, it is required to be noted that the High Court</div><div>has observed that in any event the authorised</div><div>representative of the assessee appeared before</div><div>the AO and accepted that the notices has been</div><div>issued. In that view of the matter, thereafter it is</div><div>CA 5769/2022 Etc. Page 42 of 67</div><div>not open for the assessees to make a grievance</div><div>with respect to non-service of the notice;</div><div>2) On the aspect relating to the control and</div><div>management of the affairs, the ITAT recorded the</div><div>findings as under:</div><div>i) It is important to highlight that the ITAT</div><div>had neither reserved nor found the</div><div>findings of the AO as upheld by the</div><div>CIT(A), as not maintainable or factually</div><div>erroneous or perverse.</div><div>ii) The findings of fact rendered by the AO</div><div>as upheld by the CIT(A) remain</div><div>undisturbed and unquestioned.</div><div>iii) The entire discussion by the ITAT has</div><div>only been an analysis of various case law</div><div>on this point without questioning the</div><div>underlying findings.</div><div>iv) The ITAT finally came to a conclusion that</div><div>since all the 5 companies had been</div><div>registered in Sikkim, Sikkim will get the</div><div>jurisdiction to tax.</div><div>Thereafter, the ITAT concluded that the revenue could not</div><div>discharge its burden and, therefore, control and</div><div>CA 5769/2022 Etc. Page 43 of 67</div><div>management was only in Sikkim and the income had</div><div>accrued only in Sikkim.</div><div>6.1 While reversing the finding of the AO on whether the</div><div>commission was not earned in Gangtok, though the AO</div><div>found that the notices were sent to those who had</div><div>allegedly paid the commission to the assessees and the</div><div>summons under Section 131 had not been complied with,</div><div>the ITAT gave a finding that the AO did not proceed further</div><div>and thus, since no adverse material has been brought on</div><div>record, the AO could not have proceeded to draw adverse</div><div>inference as the burden was heavily on the revenue.</div><div>6.2 On the levy of interest, the ITAT concluded that the</div><div>interest could not have been levied since the AO had not</div><div>applied his mind before levying interest following the</div><div>decision of the Patna High court in the case of Ranchi</div><div>Club Limited (supra).</div><div>Findings recorded by the High Court:</div><div>1. That a company, though incorporated in Sikkim, if it</div><div>had earned any income outside Sikkim and within</div><div>India, Income Tax Act, 1961 would apply to such</div><div>income and the jurisdiction of the income tax</div><div>authorities would not get excluded as long as what</div><div>CA 5769/2022 Etc. Page 44 of 67</div><div>is sought to be brought to take is the income of the</div><div>company incorporated in Sikkim, which income</div><div>accrued to it and was earned in India.</div><div>2. While referring to the various statements made by</div><div>the directors who are all stationed in Delhi, the High</div><div>Court has given the following findings:</div><div>i) Rattan Gupta had not acted merely as an</div><div>auditor giving professional advice to the 5</div><div>entities;</div><div>ii) His own employees are appointed as</div><div>directors;</div><div>iii) The explanation offered for signed cheque</div><div>books, rubber seals and letter heads being</div><div>available in his office is not convincing;</div><div>iv) Rattan Gupta had tried to shift the entire</div><div>responsibility of handling of cheques to Mr.</div><div>Verma; Mr. Verma was never produced by</div><div>the assessee;</div><div>v) The burden of proof could not be discharged</div><div>in the instant case and therefore, the High</div><div>Court upheld the findings of the AO that the</div><div>precise role of Mr. Rattan Gupta as being in</div><div>de facto control of the 5 entities appears to</div><div>be correct;</div><div>CA 5769/2022 Etc. Page 45 of 67</div><div>vi) That two persons who had been identified to</div><div>have handled the business and supervised</div><div>it, namely, H.L. Verma and Uma Shankar</div><div>Sitani were produced by the assessees for</div><div>their statements to be recorded. The High</div><div>Court found that Mr. R.K. Goswami, Mr.</div><div>Vedant Mehta and Mr. Rajiv Jain had all</div><div>become directors on the request of Mr.</div><div>Rattan Gupta, a fact which was not</div><div>disproved or found to be incorrect.</div><div>6.3 Thereafter, the High Court concluded that the</div><div>control and management of affairs was wholly in India for</div><div>the following reasons:</div><div>a) Rattan Gupta was not only doing audit work but</div><div>determining who should be the directors of the said</div><div>companies.</div><div>b) The rubber seals, letter heads, blank signed</div><div>cheques and other records were all found in the office</div><div>of Rattan Gupta. The factual determination by the AO</div><div>remains undisputed and this fortifies that the control</div><div>and management was in Delhi.</div><div>c) The statement of Rattan Gupta suggesting that H.L.</div><div>Verma or Uma Shankar Sitani were actually handling</div><div>CA 5769/2022 Etc. Page 46 of 67</div><div>the affairs of the 5 entities could not be made good by</div><div>offering either of them for examination.</div><div>d) Once documents were seized and statements were</div><div>recorded from various persons, the burden gets shifted</div><div>to the assessees to produce some evidence to counter</div><div>the picture and, the court found that its extremely</div><div>unusual that the seals and the signed blank cheques</div><div>would be lying with the Chartered Accountant.</div><div>e) The High Court in paragraph 70 held that the</div><div>revenue is right as there can be no presumption in law</div><div>that control and management is at the registered office.</div><div>f) In paragraph 71, the High Court held that “it appears</div><div>to the Court that the ITAT has not upset the factual</div><div>finding of the AO, which was confirmed by the CIT(A).</div><div>The above exhaustive evidence gathered by the</div><div>revenue, without being countered by the assessee</div><div>despite opportunity being afforded, serves to</div><div>substantiate the case of the revenue that the</div><div>management and control of the 5 assessee companies</div><div>was in fact located in Delhi. The finding by the ITAT in</div><div>this regard is plainly perverse and unsustainable in law.”</div><div>g) On commission and accrual of income, the High</div><div>Court concluded as under:</div><div>CA 5769/2022 Etc. Page 47 of 67</div><div>i) The findings by the AO that the assessee had</div><div>failed to prove that the commission payments earned</div><div>by them is exclusively in Sikkim had not been</div><div>dislodged by the assessee by producing any tangible</div><div>material;</div><div>ii) The evidence produced by the assesses are</div><div>only copies of bills and vouchers and receipt of</div><div>money from such agents at Sikkim in its bank</div><div>accounts and assessments have been made under</div><div>the Sikkim Manual, 1948;</div><div>iii) The High Court in para 76 held that “none of</div><div>the 5 entities named by the assessees as having paid</div><div>the commission to them appeared in the course of</div><div>assessment proceedings to confirm the payments</div><div>having been made to the assessees.” The High</div><div>Court also recorded that the rate of commission paid</div><div>was unrealistic and beyond human probabilities, nonexistence of any employees in Sikkim, non-incurring</div><div>of any expenditure in Sikkim as found in the P&L</div><div>account and finally the balance sheet showing that</div><div>notwithstanding that the income was from</div><div>commission the assets were in the form of</div><div>investments in Dalmia Group would stare at the face</div><div>of the assessees and remains unrebutted. The High</div><div>CA 5769/2022 Etc. Page 48 of 67</div><div>Court concluded that the findings by the ITAT in this</div><div>regard is contrary to the record and is based on</div><div>surmises and unsustainable in law.</div><div>6.4 In light of the above findings, the submissions made</div><div>by the learned counsel for the respective parties on</div><div>service of notice upon Rattan Gupta being in the control</div><div>and management of the respective assessees; the control</div><div>and management of the affairs of the assessee</div><div>companies; the applicability of the Income Tax Act, 1961;</div><div>jurisdiction of the AO and levy of interest are required to</div><div>be considered.</div><div>7. On appreciation of the entire evidence on record,</div><div>the AO, CIT(A) and the High Court have specifically held</div><div>against the assessees that in fact Rattan Gupta did not</div><div>merely render professional services but had a vital say in</div><div>the control and management of the assessee companies</div><div>and in fact he was in control and management of the</div><div>affairs of the respective assessee companies.</div><div>7.1 On control and management of business, few</div><div>decisions on interpretation of Section 4A of the erstwhile</div><div>Income Tax Act, 1922 and interpretation of Section 6(3) of</div><div>the Income Tax Act, 1961 are required to be referred to,</div><div>which are as under:</div><div>CA 5769/2022 Etc. Page 49 of 67</div><div>i) In the case of V.V.R.N.M. Subbayya Chettiar</div><div>(supra), it is observed in paragraph 10 as under:</div><div>“10. The principles which are now well established in England</div><div>and which will be found to have been very clearly enunciated</div><div>in Swedish Central RailwayCo. Ltd. v. Thompson (Inspector of</div><div>Taxes) [Swedish Central Railway Co. Ltd. v. Thompson</div><div>(Inspector of Taxes), 1925 AC 495 : 9 TC 373 (HL)] , which is</div><div>one of the leading cases on the subject, are:</div><div>(1) That the conception of residence in the case of a</div><div>fictitious “person”, such as a company, is as artificial as the</div><div>company itself, and the locality of the residence can only be</div><div>determined by analogy, by asking where is the head and seat</div><div>and directing power of the affairs of the company. What these</div><div>words mean have been explained by M. Patanjali Sastri, J. with</div><div>very great clarity in the following passage where he deals with</div><div>the meaning of Section 4-A(b) of the Income Tax Act:</div><div>“4-A. (b) ‘Control and management’ signifies, in the present</div><div>context, the controlling and directive power, ‘the head and</div><div>brain’ as it is sometimes called, and ‘situated’ implies the</div><div>functioning of such power at a particular place with some</div><div>degree of permanence, while ‘wholly’ would seem to recognise</div><div>the possibility of the seat of such power being divided between</div><div>two distinct and separated places.”</div><div>As a general rule, the control and management of a business</div><div>remains in the hand of a person or a group of persons, and the</div><div>question to be asked is wherefrom the person or group of</div><div>persons controls or directs the business.</div><div>(2) Mere activity by the company in a place does not create</div><div>residence, with the result that a company may be “residing” in</div><div>one place and doing a great deal of business in another.</div><div>(3) The central management and control of a company may</div><div>be divided, and it may keep house and do business in more</div><div>than one place, and, if so, it may have more than one</div><div>residence.</div><div>(4) In case of dual residence, it is necessary to show that</div><div>the company performs some of the vital organic functions</div><div>incidental to its existence as such in both the places, so that in</div><div>fact there are two centres of management.”</div><div>CA 5769/2022 Etc. Page 50 of 67</div><div>ii) Thereafter, in the case of Erin Estate (supra), it is</div><div>observed in paragraphs 6 & 9 as under:</div><div>“6. There is no doubt that the question raised for our decision</div><div>is a question of law. Whether or not the appellant is a resident</div><div>firm under Section 4-A(b) would depend upon the legal effect</div><div>of the facts proved in the case. The status of the appellant</div><div>which has to be determined by reference to the relevant</div><div>section of the Act is a mixed question of fact and law and in</div><div>determining this question the principles of law deducible from</div><div>the provisions of the said section will have to be applied. This</div><div>position has not been disputed before us in the present</div><div>proceedings. Section 4-A(b) provides inter alia that “for the</div><div>purpose of the Act, a firm is resident in the taxable territories</div><div>unless the control and management of its affairs is situated</div><div>wholly without the taxable territories”. This provision shows</div><div>that, where the partners of a firm are residents of this country,</div><div>the normal presumption would be that the firm is resident in</div><div>the taxable territories. This presumption is rebuttable and it</div><div>can be effectively rebutted by the assessee showing that the</div><div>control and management of the affairs of the firm is situated</div><div>wholly without the taxable territories. The onus to rebut the</div><div>initial presumption is on the assessee. The control and</div><div>management contemplated by the section evidently refers to</div><div>the controlling and directing power. Often enough, this power</div><div>has been described in judicial decisions as the “head and</div><div>brain”; the affairs of the firm which are subject to the said</div><div>control and management refer to the affairs which are relevant</div><div>for the purpose of taxation and so they must have some</div><div>relation to the income of the firm. When the section refers to</div><div>the control and management being situated wholly without the</div><div>taxable territories it implies that the control and management</div><div>can be situated in more places than one. Where the control</div><div>and management are situated wholly outside India the initial</div><div>presumption arising under the section is effectively rebutted. It</div><div>is true that the control and management which must be shown</div><div>to, be situated at least partially in India is not the merely</div><div>theoretical control and power, not a de jure control and power</div><div>but the de facto control and power actually exercised in the</div><div>course of the conduct and management of the affairs of the</div><div>firm. Theoretically, if the partners reside in India they would</div><div>CA 5769/2022 Etc. Page 51 of 67</div><div>naturally have the legal right to control the affairs of the firm</div><div>which carries on its operations outside India. The presence of</div><div>this theoretical de jure right to control and manage the affairs</div><div>of the firm which inevitably vests in all the partners would not</div><div>by itself show that the requisite control and management is</div><div>situated in India. It must be shown by evidence that control</div><div>and management in the affairs of the firm is exercised, may be</div><div>to a small extent, in India before it can be held that the control</div><div>and management is not situated wholly without the taxable</div><div>territories. (Vide B.R. Naik v. CIT [(1945) 13 ITR 124 : (1946)</div><div>14 ITR 334] ). The effect and scope of the provisions of</div><div>Section 4-A(b) has been considered by this Court</div><div>in V.V.R.N.M. Subbayya Chettiar v. CIT [1950 SCC 971 :</div><div>(1950) SCR 961, 965] . After examining the relevant decisions</div><div>on this point, Fazi Ali, J., who delivered the judgment of the</div><div>Court, has observed “(1) that the conception of residence in</div><div>the case of a fictitious ‘person’ such as a company, is as</div><div>artificial as the company itself and the locality of the residence</div><div>can only be determined by analogy, by asking where is the</div><div>head and seat and directing power of the affairs of the</div><div>company. …(2) Mere activity by the company in a place does</div><div>not create residence, with the result that the company may be</div><div>residing in one place and doing a great deal of business in</div><div>another. (3) The central management and control of a</div><div>company may be divided and it may keep house and do</div><div>business in more than one place, and, if so, it may have more</div><div>than one residence. (4) In case of dual residence, it is</div><div>necessary to show that the company performs some of the</div><div>vital organic functions incidental to its existence as such in</div><div>both the places so that in fact there are two centres of</div><div>management”. It is in the light of these principles that Section</div><div>4-A(b) has to be construed. Thus, the only question which</div><div>remains to be considered is whether the High Court of Madras</div><div>was right in holding that the appellant was resident in India</div><div>under Section 4-A(b).</div><div>xxx xxx xxx</div><div>9. Mr Kolah then raised a further point which had not been</div><div>urged before the High Court. He contended that the control</div><div>and management mentioned in Section 4-A(b) must be control</div><div>CA 5769/2022 Etc. Page 52 of 67</div><div>and management valid and effective in law. Under Section 12</div><div>of the Partnership Act, it is only the majority of partners who</div><div>could have given effective directions to the superintendent and</div><div>since there is no evidence that the alleged control and</div><div>management has been exercised by the majority of partners</div><div>acting in concert it would not be possible to hold that any</div><div>control and management of the firm's affairs resided in India.</div><div>We do not think there is any substance in this argument.</div><div>Under Section 12(a), every partner has a right to take part in</div><div>the conduct of the business and it is only where difference</div><div>arises as to ordinary matters connected with the business of</div><div>the firm that the same has to be decided by majority of</div><div>partners under sub-section (c) of the said section. It has not</div><div>been suggested or shown that there was any difference</div><div>between the partners in regard to the matters covered by the</div><div>individual partner's letters of instruction to the superintendent.</div><div>Indeed the course of conduct evidenced by these letters</div><div>shows that Andiappa Pillai who holds the maximum number of</div><div>individual shares has purported to act for the partnership and</div><div>usually gave instructions in regard to the conduct and</div><div>management of the firm's affairs. On the record we see no</div><div>trace of any protest against, or disagreement with, this</div><div>conduct of Andiappa Pillai. Besides, it was never suggested</div><div>during the course of the enquiry before the Income Tax</div><div>Officers that the directions given by Andiappa Pillai were not</div><div>valid or effective and had not been agreed upon by the</div><div>remaining partners. That is why we think this technical point</div><div>raised by Mr Kolah must fail.”</div><div>iii) That thereafter the Bombay High Court in the case</div><div>of Narottam and Pareira Ltd. (supra) through Justice</div><div>M.C. Chagla, as His Lordship then was, observed and</div><div>held in paragraphs 3 and 4 as under:</div><div>“3. It is also necessary that the control and</div><div>management of the affairs of the company should be</div><div>situated wholly in the taxable territories. Therefore, if</div><div>any part of the control and management is outside the</div><div>taxable territories then the company would not be</div><div>CA 5769/2022 Etc. Page 53 of 67</div><div>resident. In this connection it is perhaps necessary to</div><div>look at the converse definition for a Hindu undivided</div><div>family, firm or other association of persons. In their</div><div>case they are resident unless the control and</div><div>management of its affairs is situated wholly without</div><div>the taxable territories. Therefore; whereas in the case</div><div>of a Hindu undivided family or firm or association of</div><div>persons any measure of control and management</div><div>within the taxable territories would make them</div><div>resident, in the case of a company any measure of</div><div>control and management of its affairs outside the</div><div>taxable territories would make it non-resident. In</div><div>construing the expression “control and management”</div><div>it is necessary to bear in mind the distinction between</div><div>doing of business and the control and management of</div><div>business. Business and the whole of it may be done</div><div>outside India and yet the control and management of</div><div>that business may be wholly within India. In this</div><div>particular case considerable emphasis is placed upon</div><div>the fact that the whole of the business of the company</div><div>is done in Ceylon and the whole of the income which is</div><div>liable to tax has been earned in Ceylon. But that is not</div><div>a factor which the Legislature has emphasised, It is</div><div>entirely irrelevant where the business is done and</div><div>where the income has been earned. What is relevant</div><div>and material is from which place has that business</div><div>been controlled and managed. “Control and</div><div>management” referred to in Section 4A(c) is, as we</div><div>shall presently point out on the authorities, central</div><div>control and management. The control and</div><div>management contemplated by this sub-section is not</div><div>the carrying on of day to day business by servants,</div><div>CA 5769/2022 Etc. Page 54 of 67</div><div>employees or agents. The real test to be applied is,</div><div>where is the controlling and directing power, or rather,</div><div>where does the controlling and directing power</div><div>function or to put it in a different language there is</div><div>always a seat of power or the head and brain, and</div><div>what has got to be ascertained is, where is this seat of</div><div>power, or the head and brain. A company or for the</div><div>matter of that a firm or an undivided Hindu family has</div><div>got to work through servants and agents, but it is not</div><div>the servants and agents that constitute the seat of</div><div>power or the controlling and directing power. It is that</div><div>authority to which the servants, employees and agents</div><div>are subject, it is that authority which controls and</div><div>manages them, which is the central authority, and it is</div><div>at the place where the central authority functions that</div><div>the company resides. It’ may be in some cases that</div><div>like an individual a company may have residence in</div><div>more than one place. It may exercise control and</div><div>management not only from one fixed abode, but it</div><div>may have different places. That would again be a</div><div>question dependent upon the circumstances of each</div><div>case. But the contention which Mr. Kolah has most</div><div>strongly pressed before us is entirely unacceptable</div><div>that a company controls or manages at a particular</div><div>place because its affairs are carried on at a particular</div><div>place and they are carried on by people living there</div><div>appointed by the company with large powers of</div><div>management. A company may have a dozen local</div><div>branches at different places outside India, it may send</div><div>out agents fully armed with authority to deal with and</div><div>carry on business at these branches, and yet it may</div><div>retain the central management and control in Bombay</div><div>CA 5769/2022 Etc. Page 55 of 67</div><div>and manage and control all the affairs of these</div><div>branches from Bombay and at Bombay. It would be</div><div>impossible to contend that because there are</div><div>authorised agents doing the business of the company</div><div>at six different places outside India, therefore the</div><div>company is resident not only in Bombay but at all</div><div>these six different places.</div><div>4. ….It is perfectly true that these two managers do all</div><div>the business of the company in Ceylon and in doing</div><div>that business naturally a large amount of discretion is</div><div>given to them and a considerable amount of authority.</div><div>But the mere doing of business does not constitute</div><div>these managers the controlling and directing power.</div><div>Their power-of-attorney can be cancelled at any</div><div>moment, they must carry out any orders given to them</div><div>from Bombay, they must submit to Bombay an</div><div>explanation of what they have been doing, and</div><div>throughout the time that they are working in Ceylon a</div><div>vigilant eye is kept over their work from the directors'</div><div>board room in Bombay. The correspondence which has</div><div>also been relied upon between the company here and</div><div>its office in Colombo also goes to show and</div><div>emphasises the same state of affairs. Mr. Kolah is right</div><div>again when he puts emphasis upon the fact that what</div><div>we have to consider in this case is not the power or</div><div>the capacity to manage and control, but the actual</div><div>control and management, or, in other words, not the</div><div>dejure control and management but thede facto</div><div>control and management, and in order to hold that the</div><div>company is resident during the years of account it</div><div>must be established that the company de facto</div><div>controlled and managed its affairs in Bombay. Mr.</div><div>CA 5769/2022 Etc. Page 56 of 67</div><div>Kolah says that the two powers-of-attorney go to show</div><div>that whatever legal or juridical control and</div><div>management the company might have had, in fact the</div><div>actual management was exercised by the two</div><div>managers in Ceylon. In our opinion this is not a case</div><div>where the company did nothing with regard to the</div><div>actual management and control of its affairs and left it</div><div>to some other agency. As we said before, the two</div><div>managers were the employees of the company acting</div><div>throughout the relevant period under the control and</div><div>management of the company, and therefore in the</div><div>case we are considering there was not only a dejure</div><div>control and management, but also a de facto control</div><div>and management.”</div><div>That thereafter, Justice Kania, as His Lordship then</div><div>was, after referring to the decision in the case of B.R.</div><div>Naik v. Commissioner of Income Tax, Bombay, (1945)</div><div>13 ITR 124 has observed and held that the expression</div><div>“control and management” means where the central</div><div>control and management actually abides.</div><div>iv) The Calcutta High Court in the case of Bank of</div><div>China (supra) has specifically held that a company</div><div>may be simultaneously resident in more than one place,</div><div>but the control and management is where the head and</div><div>CA 5769/2022 Etc. Page 57 of 67</div><div>brain is situated. While holding so, in paragraphs 7 to 9,</div><div>it is observed and held as under:</div><div>“7. Under s. 6(3), a non-Indian company is said to be resident</div><div>in India in any previous year if during that year the control and</div><div>management of its affairs is situated wholly in India. The</div><div>determination as to at what place or places the control and</div><div>management of a particular company is situated is essentially</div><div>a question of fact to be determined on the facts and</div><div>circumstances of the particular case. A company can be</div><div>simultaneously resident in more than one place but the</div><div>question is whether the control and management is situated</div><div>wholly in India during the relevant previous year. The</div><div>expression “control and management” signifies the controlling</div><div>and directive power, “the head and brain”, as it is sometimes</div><div>called, and “situated” implies the functioning of such power at</div><div>a particular place with some degree of permanence. The word</div><div>“wholly” as used in s. 6(3) would indicate that the seat of such</div><div>power may be divided between two distinct and separate</div><div>places. The expression “control and management” means de</div><div>facto control and management and not merely the right or</div><div>power to control and manage. In order to hold that a nonIndian company is resident in India during any previous year, it</div><div>must be established that such company de facto controls and</div><div>manages its affairs in India. The principles are by now well</div><div>settled.</div><div>8. Lord Loreburn L.C. in De Beers Consolidated Mines</div><div>Ltd. v. Howe, [1906] 5 TC 198 (HL) at page 212, observed as</div><div>follows:</div><div>“Mr. Cohen propounded a test which had the merits of</div><div>simplicity and certitude. He maintained that a company</div><div>resides where it is registered, and nowhere else…… I cannot</div><div>adopt Mr. Cohen's contention. In applying the conception of</div><div>residence to a company, we ought, I think, to proceed as</div><div>nearly as we can upon the analogy of an individual. A</div><div>company cannot eat or sleep, but it can keep house and do</div><div>business. We ought, therefore, to see whether it really keeps</div><div>house and does business. An individual may be of foreign</div><div>nationality, and yet reside in the United Kingdom. So may a</div><div>company. Otherwise, it might have its chief seat of</div><div>CA 5769/2022 Etc. Page 58 of 67</div><div>management and its centre of trading in England, under the</div><div>protection of English law, and yet escape the appropriate</div><div>taxation by the simple expedient of being registered abroad</div><div>and distributing its dividends abroad. The decision of Chief</div><div>Baron Kelly and Baron Huddleston in Calcutta Jute Mills Co.</div><div>Ltd. v. Henry Nicholson, [1876] 1 TC 83 : [1876] 1 Ex D 428</div><div>and Cesena Sulphur Co. Ltd. v. Henry Nicholson, [1876] 1</div><div>TC 83 : [1876] 1 Ex D 428, now thirty years ago, involved the</div><div>principle that a company resides for purposes of income-tax</div><div>where its real business is carried on. Those decisions have</div><div>been acted upon ever since. I regard that as the true rule;</div><div>and the real business is carried on where the central</div><div>management and control actually abides.”</div><div>9. Since that judgment, the words underlined have been taken</div><div>as the test, although central management and control has</div><div>sometimes been stated in the form “head, seat and directing</div><div>power”. The question depends on the fact of the management</div><div>and not on the physical situation of the thing that is managed.</div><div>A company is managed by the board of directors and if the</div><div>meetings of the board of directors are held within India, it may</div><div>be said that the central control and management is situated</div><div>here. The direction, management and control “the head and</div><div>seat and directing power” of a company's affairs is, therefore,</div><div>situate at the place where the directors' meetings are held</div><div>and, consequently, a non-Indian company would be a resident</div><div>in this country if the meetings of the directors who manage</div><div>and control the business are held here. The word “affairs”</div><div>means affairs which are relevant for the purpose of the I.T. Act</div><div>and which have some relation to the income sought to be</div><div>assessed. It is not the bare possession of powers by the</div><div>directors, but their taking part in or controlling the affairs</div><div>relating to the trading, that is of importance in determining the</div><div>question of the place where the control is exercised. They</div><div>must exercise their power of control in relation to business or</div><div>activity wherefrom the profit is derived. (See Egyptian Hotels</div><div>Ltd. v. Mitchell, [1915] 6 TC 542 (HL)).”</div><div>v) In the case of Nandlal Gandalal (supra), this Court</div><div>has held that the expression “control and management”</div><div>in Section 4A(b) of the Income Tax Act, 1922, means de</div><div>CA 5769/2022 Etc. Page 59 of 67</div><div>facto control and management and not merely the right</div><div>or power to control and manage.</div><div>8. The sum and substance of the above decisions of</div><div>this Court as well as various High Courts would be that</div><div>where the head and seat and directing power of the affairs</div><div>of the company and the control and management is must</div><div>be shown is not merely theoretical control and power, i.e.,</div><div>not de jure control and power, but de facto control and</div><div>power actually exercised in the course of the conduct and</div><div>management of the affairs of the firm; that the domicile or</div><div>the registration of the company is not at all relevant and</div><div>the determinate test is where the sole right to manage and</div><div>control of the company lies.</div><div>9. Applying the above principles of law to the facts of</div><div>the case at hand, and the findings recorded by the AO,</div><div>confirmed by the CIT(A), it is rightly concluded that the</div><div>control and management of the affairs of the respective</div><div>assessees were with Rattan Gupta, Chartered Accountant</div><div>in Delhi. The findings of fact recorded by the AO,</div><div>confirmed by the CIT(A) that the control and management</div><div>of the affairs of the assessee companies was with Rattan</div><div>Gupta are based on the entire material on record. In light</div><div>of the aforesaid findings, the High Court has not</div><div>CA 5769/2022 Etc. Page 60 of 67</div><div>committed any error in reversing the contrary findings</div><div>recorded by the ITAT and it is rightly observed and held</div><div>that service of notice upon Rattan Gupta treating him as</div><div>the principal officer and/or as a principal officer for and on</div><div>behalf of the assessee companies were valid notices and</div><div>the High Court has rightly held that the AO at New Delhi</div><div>was having the jurisdiction to issue notice under the</div><div>Income Tax Act, 1961.</div><div>10. Insofar as the case on behalf of the respective</div><div>assessees that the entire income was earned in Sikkim by</div><div>way of commission on sale of cardamom and therefore</div><div>such income shall not be liable to be taxed under the</div><div>Income Tax Act, 1961 is concerned, at the outset, it is</div><div>required to be noted that there are concurrent findings</div><div>recorded by the AO and the CIT(A), as approved by the</div><div>High Court, that no income by way of commission, as</div><div>claimed by the assessees, has been established and</div><div>proved by the assessees. In fact, the AO issued</div><div>notices/summons to different persons who had allegedly</div><div>paid amounts as commission, however, those persons</div><div>had not responded. Therefore, the AO as such has rightly</div><div>drawn an adverse inference. At this stage, it is required to</div><div>be noted that as such the assessees did not produce any</div><div>worthwhile evidence to prove the genuineness of the</div><div>CA 5769/2022 Etc. Page 61 of 67</div><div>commission received. Despite the above, the ITAT</div><div>reversed the findings of fact recorded by the AO and the</div><div>CIT(A) by observing that the AO did not proceed further</div><div>(after issuing the summons/notices) and that since no</div><div>adverse material has been brought on record the AO</div><div>could not have proceeded to draw an adverse inference</div><div>as the burden was heavy on the revenue. Once, the AO</div><div>issued summons to those who had allegedly paid the</div><div>commission to the assessees and the summons were</div><div>issued under Section 131 which were not complied with</div><div>and it was the assertion on behalf of the respective</div><div>assessees that they earned the income of commission</div><div>within Sikkim, the burden to prove the same was upon the</div><div>assessees. Under the circumstances, the ITAT wrongly</div><div>and erroneously shifted the burden upon the AO to prove</div><div>the contrary. Therefore, in absence of any material on</div><div>record that the commission was earned only in Gangtok,</div><div>the assessees cannot be permitted to say that they were</div><div>liable to pay the tax under the Sikkim Manual, 1948 and</div><div>not under the Income Tax Act, 1961. It appears that the</div><div>assessees with mala fide intention and to evade the</div><div>payment of tax under the Income Tax Act, 1961 came out</div><div>with a case that they earned the income within Sikkim,</div><div>which has not been established and proved. It was a</div><div>CA 5769/2022 Etc. Page 62 of 67</div><div>clear attempt on the part of the respective assessees to</div><div>wriggle out of the clutches of the Income Tax Act, 1961.</div><div>11. As regards the submission on behalf of the</div><div>respective assessees that as there was no original</div><div>assessment under the Income Tax Act, 1961, there could</div><div>not have been the re-assessment under sections 147/148</div><div>of the Act, 1961 is concerned, the same has no substance</div><div>in view of the binding decision of this Court in the case of</div><div>Sun Engineering Works P. Ltd. (supra). In paragraph</div><div>14 of the said decision, it is observed and held as under:</div><div>“14…..Thus, under Section 147, the assessing officer has</div><div>been vested with the power to ‘assess or reassess’</div><div>the escaped income of an assessee. The use of the</div><div>expression “assess or reassess such income or recompute the</div><div>loss or depreciation allowance” in Section 147 after the</div><div>conditions for reassessment are satisfied, is only relatable to</div><div>the preceding expression in clauses (a) and (b) viz., “escaped</div><div>assessment”. The term “escaped assessment” includes both</div><div>“non-assessment” as well as “under assessment”. Income is</div><div>said to have “escaped assessment” within the meaning of this</div><div>section when it has not been charged in the hands of an</div><div>assessee in the relevant year of assessment. The expression</div><div>“assess” refers to a situation where the assessment of the</div><div>assessee for a particular year is, for the first time, made by</div><div>resorting to the provisions of Section 147 because the</div><div>assessment had not been made in the regular manner under</div><div>the Act. The expression “reassess” refers to a situation where</div><div>an assessment has already been made but the Income Tax</div><div>Officer has, on the basis of information in his possession,</div><div>reason to believe that there has been under assessment on</div><div>account of the existence of any of the grounds contemplated</div><div>by the provisions of Section 147(b) read with the Explanation</div><div>(1) thereto.”</div><div>CA 5769/2022 Etc. Page 63 of 67</div><div>12. Insofar as the submission on behalf of the</div><div>respective assessees regarding levy of interest and the</div><div>submission on behalf of the assessees that in absence of</div><div>any specific order passed in the assessment order to levy</div><div>interest, the interest could not have been levied, is</div><div>concerned, the said issue as such is concluded against</div><div>the assessees in view of the Constitution Bench decision</div><div>of this Court in the case of Anjum M.H. Ghaswala</div><div>(supra) as well as the subsequent decision in the case of</div><div>Karanvir Singh Gossal (supra). The ITAT relied upon</div><div>the decision of the Patna High Court in the case of</div><div>Ranchi Club Ltd. (supra), however, the decision of the</div><div>Patna High Court in the case of Ranchi Club Ltd.</div><div>(supra) is held to be not good law, in view of the</div><div>Constitution Bench decision of this Court in the case of</div><div>Anjum M.H. Ghaswala (supra).</div><div>12.1 In the case of Anjum M.H. Ghaswala (supra), while</div><div>dealing with the interest under the provisions of Sections</div><div>234A, 234B and 234C of the Income Tax Act, 1961, it is</div><div>observed and held that the interest contemplated under</div><div>the said provisions is mandatory in nature and the power</div><div>of waiver or reduction has not been expressly conferred</div><div>on the Commission. The same indicates that insofar as</div><div>CA 5769/2022 Etc. Page 64 of 67</div><div>the payment of statutory interest is concerned, the same</div><div>is outside the purview of the settlement contemplated in</div><div>Chapter XIX-A of the Act. In the present case also, the</div><div>levy of interest under Section 234A for default in</div><div>furnishing the return of income is mandatory and</div><div>automatic. Section 234A of the Act provides that where</div><div>the return of income for any assessment year is furnished</div><div>after the due date or is not furnished, the assessee shall</div><div>be liable to pay simple interest. Thus, interest under</div><div>section 234A is statutory interest leviable and payable and</div><div>therefore the decision of this Court in the case of Anjum</div><div>M.H. Ghaswala (supra) shall be applicable with full force.</div><div>Therefore, when the interest is levied as per the workings</div><div>mentioned in ITNS 150 which is forming part of the</div><div>assessment order, it is rightly held to be sufficient and</div><div>good enough to charging interest. (See decision of this</div><div>Court in the case of Bhagat Construction Company</div><div>Private Limited (supra)).</div><div>13. As regards the submission on behalf of the</div><div>assessees that no substantial question of law was framed</div><div>on levy of interest, at the outset, it is required to be noted</div><div>that both the parties made submissions on levy of interest</div><div>elaborately which have been dealt with and considered by</div><div>the High Court in light of the Constitution Bench decision</div><div>CA 5769/2022 Etc. Page 65 of 67</div><div>of this Court in the case of Anjum M.H. Ghaswala</div><div>(supra). Even otherwise, the said issue can be said to be</div><div>incidental or collateral. Even otherwise, in view of the</div><div>decision of this Court in the case of Anjum M.H.</div><div>Ghaswala (supra) holding that the levy of interest under</div><div>Section 234A is statutory interest and mandatory and</div><div>automatic, thereafter the said issue cannot be said to be a</div><div>question of law.</div><div>Conclusion:</div><div>14. In view of the above and for the reasons stated</div><div>above and the findings recorded by the AO, CIT(A),</div><div>confirmed by the High Court, it cannot be said that the</div><div>High Court has committed any error in upsetting the</div><div>findings recorded by the ITAT. We are in complete</div><div>agreement with the view taken by the AO, CIT(A) and the</div><div>High Court on all issues including the issue of control and</div><div>management of the affairs of the assessee companies by</div><div>Rattan Gupta from Delhi; jurisdiction of the AO at New</div><div>Delhi; applicability of the Income Tax Act, 1961; that the</div><div>assessees did not prove that the income was earned by</div><div>way of commission in Sikkim and therefore the tax was</div><div>not liable to be paid under the Income Tax Act, 1961 and</div><div>CA 5769/2022 Etc. Page 66 of 67</div><div>was liable to be paid under the Sikkim Manual, 1948. We</div><div>are also in agreement with the view taken by the High</div><div>Court on levy of interest in view of the binding decision of</div><div>the Constitution Bench in the case of Anjum M.H.</div><div>Ghaswala (supra), which has been subsequently</div><div>followed in the case of Karanvir Singh Gossal (supra).</div><div>15. In view of the above and for the reasons stated</div><div>above, the present appeals fail and the same deserve to</div><div>be dismissed and are accordingly dismissed. However, in</div><div>the facts and circumstances of the case, there shall be no</div><div>order as to costs.</div><div>………………………………J.</div><div>[M.R. SHAH]</div><div>NEW DELHI; ………………………………J.</div><div>APRIL 10, 2023. [B.V. NAGARATHNA]</div><div><br /></div><div>CA 5769/2022 Etc. Page 67 of 67</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-79265619919905953242023-04-10T06:11:00.002-07:002023-04-10T06:11:16.739-07:00M/s US Technologies International Pvt. Ltd. Versus The Commissioner ...Respondent(s) of Income Tax<div>M/s US Technologies International Pvt. Ltd. Versus The Commissioner ...Respondent(s) of Income Tax </div><div><br /></div>
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<p style="text-align: justify;"><b><a href="https://www.indianconstitution.in/p/landmark-judgments.html">Landmark Cases</a> of India / </b><span style="text-align: left;"><b><a href="https://www.indianconstitution.in/2021/09/100-100-landmark-cases-of-supreme-court.html">सुप्रीम कोर्ट के ऐतिहासिक फैसले</a></b></span></p>
<div><br /></div><div><br /></div><div>REPORTABLE</div><div>IN THE SUPREME COURT OF INDIA</div><div>CIVIL APPELLATE JURISDICTION</div><div>Civil Appeal No. 7934 of 2011</div><div>M/s US Technologies ...Appellant(s)</div><div>International Pvt. Ltd.</div><div>Versus</div><div>The Commissioner ...Respondent(s)</div><div>of Income Tax</div><div>With </div><div>Civil Appeal Nos. 12581260 of 2019</div><div>J U D G M E N T</div><div>M.R. SHAH, J.</div><div>1. Feeling aggrieved and dissatisfied with the</div><div>impugned judgment(s) and order(s) passed by</div><div>the High Court of Kerala at Ernakulam in</div><div>Page 1 of 31</div><div>confirming the levy of interest/penalty under</div><div>Section 271C of the Income Tax Act, 1961</div><div>(hereinafter referred to as the Act) on failure</div><div>of the respective assessees to deposit the tax</div><div>deducted at source (TDS) (or belated</div><div>remittance of the TDS), the respective</div><div>assessees have preferred the present appeals.</div><div>CIVIL APPEAL NO. 7934/2011</div><div>2. The facts leading the present appeal in a</div><div>nutshell are as under: </div><div>2.1 From 01.04.2002 to February, 2003, the</div><div>appellant – assessee, engaged in a software</div><div>development business at Techno Park,</div><div>Trivandrum which employed about 700</div><div>employees, deducted tax at source (TDS) in</div><div>respect of salaries, contract payments, etc.,</div><div>totalling Rs. 1,10,41,898/ for the</div><div>Page 2 of 31</div><div>assessment year (AY) 200304. In March, the</div><div>assessee remitted part of the TDS being Rs.</div><div>38,94,687/ and balance of Rs. 71,47,211/</div><div>was remitted later. Thus, the period of delay</div><div>ranged from 05 days to 10 months. On</div><div>10.03.2003, a survey was conducted by the</div><div>Revenue at assessee’s premises and it was</div><div>noted that TDS was not deposited within the</div><div>prescribed dates under Income Tax Rules (IT</div><div>Rules). On 02.06.2003, Income Tax Officer</div><div>(ITO) vide order under Section 201(1A) of the</div><div>Act, 1961 levied penal interest of Rs.</div><div>4,97,920/ for the period of delay in</div><div>remittance of TDS. On 09.10.2003, the</div><div>Additional Commissioner of Income Tax</div><div>issued a show cause notice proposing to levy</div><div>penalty under Section 271C of the amount</div><div>equal to TDS. That the assessee replied to the</div><div>Page 3 of 31</div><div>said show cause notice vide reply dated</div><div>28.10.2003. That on 06.11.2003, another</div><div>order under Section 201(1A) was passed</div><div>levying the penal interest of Rs. 22,015/. On</div><div>10.11.2003, the Additional Commissioner of</div><div>Income Tax (ACIT) vide order under Section</div><div>271C levied a penalty of Rs. 1,10,41,898/</div><div>equivalent to the amount of TDS deducted for</div><div>AY 200304. That order of Additional CIT</div><div>levying the penalty under Section 271C came</div><div>to be confirmed by the High Court by the</div><div>impugned judgment and order. The High</div><div>Court vide impugned judgment and order has</div><div>dismissed the appeal preferred by the</div><div>assessee by holding that failure to</div><div>deduct/remit the TDS would attract penalty</div><div>under Section 271C of the Act, 1961. </div><div>Page 4 of 31</div><div>2.2 Feeling aggrieved and dissatisfied with the</div><div>levy of interest/penalty under Section 271C</div><div>of the Income Tax Act, 1961 on late</div><div>remittance of TDS is the subject matter of</div><div>preferred appeal(s).</div><div>CIVIL APPEAL NOS. 12581260/2019</div><div>3. The facts leading to the present appeals in a</div><div>nutshell are under: </div><div>3.1 By order(s) dated 26.09.2013, the ACIT by</div><div>way of orders under Section 271C levied</div><div>penalty equivalent to the amount of TDS</div><div>deducted for AYs 201011, 201112 and</div><div>201213 on the ground that there was no</div><div>good and sufficient reason for not levying</div><div>penalty. </div><div>3.2 The CIT (Appeals) dismissed the assessees’</div><div>appeals. By common order dated 01.06.2016,</div><div>Page 5 of 31</div><div>the Income Tax Appellate Tribunal (ITAT)</div><div>allowed the assessees’ appeals by holding</div><div>that imposition of penalty under Section</div><div>271C was unjustified and reasonable causes</div><div>were established by the assessee for remitting</div><div>the TDS belatedly. By the impugned common</div><div>judgment and order the High Court has</div><div>allowed the Revenue’s appeals relying upon</div><div>its earlier judgment (which is the subject</div><div>matter of Civil Appeal No. 7934/2011 as</div><div>above). The impugned judgment and order</div><div>passed by the High Court is the subject</div><div>matter of present appeals being Civil Appeals</div><div>Nos. 12581260/2019. </div><div> </div><div>4. Shri Arijit Prasad and Shri C.N. Sreekumar,</div><div>learned Senior Advocates have appeared on</div><div>behalf of the respective assessees and Shri</div><div>Balbir Singh, learned ASG assisted by Ms.</div><div>Page 6 of 31</div><div>Monica Benjamin, learned counsel has</div><div>appeared on behalf of the Revenue. </div><div>5. Shri Arijit Prasad, learned Senior Advocate</div><div>appearing on behalf of the assessee in Civil</div><div>Appeal No. 7934/2011 has vehemently</div><div>submitted that in the facts and</div><div>circumstances of the case, the levy of penalty</div><div>under Section 271C of the Act, 1961 is not</div><div>justifiable at all. It is submitted that in the</div><div>facts and circumstances of the case there</div><div>shall not be any penalty leviable under</div><div>Section 271C of the Act, 1961. </div><div>5.1 It is further submitted by Shri Arijit Prasad,</div><div>learned Senior Advocate appearing on behalf</div><div>of the assessee that here is the case of late</div><div>remittance of the TDS and not a case of nondeduction of TDS at all. It is submitted that</div><div>therefore, at the most, the assessee shall be</div><div>Page 7 of 31</div><div>liable to pay the penal interest leviable under</div><div>Section 201(1A) of the Act, 1961. It is</div><div>submitted that however, there shall not be</div><div>any levy of penalty under Section 271C of the</div><div>Act, 1961 on mere late remittance of the TDS</div><div>though deducted. </div><div>5.2 It is further submitted by Shri Arijit Prasad,</div><div>learned Senior Advocate appearing on behalf</div><div>of the assessee that Section 271C would be</div><div>applicable only in case of nondeduction of</div><div>whole or any part of the tax [Section 271C(1)</div><div>(a)]. It is submitted that Section 271C(1)(a)</div><div>shall be applicable in case of nondeduction</div><div>of whole or any part of the tax as required by</div><div>or under the provisions of Chapter XVIIB. It is</div><div>submitted that in the present case Section</div><div>271C(1)(b) shall not be applicable. It is</div><div>submitted that therefore taking into</div><div>Page 8 of 31</div><div>consideration the words employed in Section</div><div>271C(1)(a), there shall be levy of penalty of a</div><div>sum equal to the amount of tax in case of</div><div>failure on the part of the concerned person</div><div>who fails to deduct the whole or any part of</div><div>the tax as required by or under the provisions</div><div>of Chapter XVIIB. It is submitted that in case</div><div>of belated remittance of the TDS, there shall</div><div>not be any levy of interest under Section</div><div>271C of the Act, 1961. </div><div>5.3 It is submitted that as per the cardinal</div><div>principle of law, a penal provision is required</div><div>to be construed strictly and literally and</div><div>nothing is to be added in the Section and the</div><div>penalty provisions are required to be read as</div><div>they are. </div><div>5.4 It is submitted that so far as the belated</div><div>remittance of the TDS is concerned, the</div><div>Page 9 of 31</div><div>Statute provides for penal interest under</div><div>Section 201(1A) of the Act, 1961. It is</div><div>submitted that the penal interest levied under</div><div>Section 201(1A) is compensatory in nature. It</div><div>is submitted that therefore, when the</div><div>Parliament thought it fit to levy the penal</div><div>interest on late remittance of the TDS for the</div><div>belated period, there shall not be any levy of</div><div>the penalty under Section 271C for belated</div><div>remittance of the TDS. </div><div>5.5 It is submitted that if the stand taken by the</div><div>Revenue and the views taken by the High</div><div>Court that even on belated remittance of the</div><div>TDS there shall be penalty levied under</div><div>Section 271C of the Act, is accepted, in that</div><div>case it would tantamount to adding</div><div>something more than which is not provided in</div><div>the Section. It is submitted that words used</div><div>Page 10 of 31</div><div>in Section 271C are “fails to deduct the whole</div><div>or any part of the tax.” It is submitted that it</div><div>does not speak “fails to deduct and remitted</div><div>belatedly.” </div><div>5.6 Shri Arijit Prasad, learned Senior Advocate</div><div>appearing on behalf of the assessee has</div><div>drawn our attention to Section 276B of the</div><div>Act, 1961. It is submitted that as per Section</div><div>276B of the Act “if a person fails to pay to</div><div>the credit of the Central Government the</div><div>tax deducted at source by him as required</div><div>by or under the provisions of Chapter</div><div>XVIIB, he shall be liable to be prosecuted</div><div>and shall be punishable with rigorous</div><div>imprisonment for a term which shall not</div><div>be less than three months but which may</div><div>extend to seven years and with fine.” It is</div><div>Page 11 of 31</div><div>submitted that therefore, Section 276B talks</div><div>about “fails to pay,” the words which are</div><div>missing in Section 271C of the Act. It is</div><div>submitted that therefore, wherever, the</div><div>Parliament wanted to provide for the</div><div>consequences on nonpayment of the TDS,</div><div>the same is provided like Section 276B of the</div><div>Act. It is submitted that therefore, thus the</div><div>words in Section 271C and Section 276B are</div><div>different and distinct. </div><div>5.7 It is further submitted by Shri Arijit Prasad,</div><div>learned Senior Advocate appearing on behalf</div><div>of the assessee that even otherwise, the</div><div>impugned judgment and order passed by the</div><div>High Court has been subsequently overruled</div><div>by the Full Bench of the Kerala High Court in</div><div>the case of Lakshadweep Development</div><div>Page 12 of 31</div><div>Corporation Ltd. Vs. Additional</div><div>Commissioner of Income Tax (TDS) and</div><div>Anr. (2019) 411 ITR 213 (FB). </div><div>5.8 It is further submitted by learned counsel</div><div>appearing on behalf of the respective</div><div>assessees in respective appeals that even</div><div>otherwise in exercise of powers under Section</div><div>273B, no penalty shall be imposed on the</div><div>person or the assessee, for any failure, if he</div><div>proves that there was a reasonable cause for</div><div>the said failure. Reliance is placed on the</div><div>decision of this Court in the case of CIT Vs.</div><div>Bank of Nova Scotia (2016) 15 SCC 81. </div><div>5.9 It is submitted that in the case of Civil</div><div>Appeals Nos. 125860/2019, the ITAT found</div><div>in favour of the assessee that there was a</div><div>reasonable cause for the assessee for the</div><div>Page 13 of 31</div><div>failure to remit the TDS belatedly. It is</div><div>submitted that once the ITAT found the case</div><div>falling under Section 273B, the same was not</div><div>required to be interfered with by the High</div><div>Court as the same cannot be said to a</div><div>substantial question of law. </div><div>5.10 Making the above submissions, it is prayed to</div><div>allow the present appeals and to hold that for</div><div>late remittance of the TDS, there shall not be</div><div>any penalty leviable under Section 271C of</div><div>the Act, 1961. </div><div>6. All these appeals are vehemently opposed by</div><div>Shri Balbir Singh, learned ASG assisted by</div><div>Ms. Monica Benjamin, learned counsel,</div><div>appearing on behalf of the Revenue.</div><div>6.1 Shri Balbir Singh, learned ASG appearing on</div><div>behalf of the Revenue has vehemently</div><div>submitted that Section 271C of the Act has</div><div>Page 14 of 31</div><div>been inserted in the year 1987. It is</div><div>submitted that the object and purpose of</div><div>inserting Section 271C is to levy the penalty</div><div>for failure to deduct tax at source. It is</div><div>submitted that under the old provision of</div><div>Chapter XXI of the Income Tax Act, no</div><div>penalty was provided for failure to deduct tax</div><div>at source though, this default, however,</div><div>attracted prosecution under the provisions of</div><div>Section 276B, which prescribed punishment</div><div>for failure to deduct tax at source or after</div><div>deducting failure to remit the same to the</div><div>Government and therefore, Section 271C</div><div>came to be inserted to provide for levy of</div><div>penalty for failure to deduct tax at source. It</div><div>is submitted that therefore, in a case where</div><div>though the assessee has deducted the tax</div><div>(TDS), but does not remit the same to the</div><div>Page 15 of 31</div><div>Government and/or belatedly remits the TDS</div><div>after deducting, such an assessee is liable to</div><div>pay the penalty under Section 271C of the</div><div>Act. </div><div>6.2 It is submitted that any other view will</div><div>frustrate the object and purpose of insertion</div><div>of Section 271C of the Act. Then, Shri Balbir</div><div>Singh, learned ASG has taken us to the</div><div>CBDT Circular No. 551 dated 23.01.1998,</div><div>explaining the amendment and insertion of</div><div>Section 271C. It is submitted that the object</div><div>and purpose of insertion of Section 271C</div><div>seems to be that over and above the</div><div>prosecution, the person who has deducted</div><div>tax at source but not remitted the same to</div><div>the Government shall also be liable to pay</div><div>penalty and that is why Section 271C has</div><div>been inserted. </div><div>Page 16 of 31</div><div>6.3 Making the above submissions, it is prayed to</div><div>dismiss the present appeals. </div><div>7. Heard learned counsel appearing on behalf of</div><div>the respective parties at length. </div><div>7.1 The short question which is posed for the</div><div>consideration of this Court is in case of</div><div>belated remittance of the TDS after deducting</div><div>the TDS whether such an assessee is liable to</div><div>pay penalty under Section 271C of the Act,</div><div>1961? </div><div>7.2 The question which is also posed for the</div><div>consideration of this Court is what is the</div><div>meaning and scope of the words “fails to</div><div>deduct” occurring in Section 271C(1)(a) and</div><div>whether an assessee who caused delay in</div><div>remittance of TDS deducted by him, can be</div><div>said a person who “fails to deduct TDS”?</div><div>Page 17 of 31</div><div>7.3 In order to appreciate the rival contentions</div><div>and to answer the aforesaid questions, it is</div><div>necessary to have analysis of Statutory</div><div>provisions. </div><div>7.4 The relevant provisions are as under: </div><div>“Section 201(1A) of the Act</div><div>Without prejudice to the provisions of</div><div>subsection (1), if any such person,</div><div>principal officer or company as is</div><div>referred to in that subsection does not</div><div>deduct the whole or any part of the tax</div><div>or after deducting fails to pay the tax</div><div>as required by or under this Act, he or</div><div>it shall be liable to pay simple interest,</div><div>—</div><div>(i) at one per cent for every month or</div><div>part of a month on the amount of such</div><div>tax from the date on which such tax</div><div>was deductible to the date on which</div><div>such tax is deducted; and</div><div>(ii) at one and onehalf per cent for</div><div>every month or part of a month on the</div><div>amount of such tax from the date on</div><div>which such tax was deducted to the</div><div>date on which such tax is actually</div><div>paid, and such interest shall be paid</div><div>before furnishing the statement in</div><div>accordance with the provisions of subsection (3) of Section 200:]</div><div>Section 271C of the Act</div><div>271C. Penalty for failure to deduct tax</div><div>at source. (1) If any person fails to—</div><div>Page 18 of 31</div><div>(a) deduct the whole or any part of the</div><div>tax as required by or under the</div><div>provisions of Chapter XVIIB; or</div><div>(b) pay the whole or any part of the tax</div><div>as required by or under,—</div><div>(i) subsection (2) of Section 115O; or</div><div>(ii) the second proviso to Section 194B;</div><div>then, such person shall be liable to</div><div>pay, by way of penalty, a sum equal to</div><div>the amount of tax which such person</div><div>failed to deduct or pay as aforesaid.]</div><div>(2) Any penalty imposable under subsection (1) shall be imposed by the</div><div>Joint Commissioner.</div><div>Section 273B of the Act</div><div>273B. Penalty not to be imposed in</div><div>certain cases.—Notwithstanding</div><div>anything contained in the provisions of</div><div>clause (b) of subsection (1) of Section</div><div>271, Section 271A 4203[Section 271</div><div>AA], Section 271B 4204[Section 271</div><div>BA], 4205[Section 271</div><div>BB, 4206[Section 271C, Section 271</div><div>CA], Section 271D, Section 271</div><div>E, 4207[Section 271F,] 4208[Section</div><div>271FA 4209[, 4210[Section 271FAB,</div><div>Section 271FB, Section 271G, Section</div><div>271GA, 4211[Section 271</div><div>GB,]]] 4212[Section 271</div><div>H,] 4213[Section 271I,] 4214[Section</div><div>271J,] clause (c) or clause (d) of subsection (1) or subsection (2) of Section</div><div>272A, subsection (1) of Section 272</div><div>AA] or 4215[Section 272B</div><div>or] 4216[subsection (1) or subsection</div><div>(1A) of Section 272BB] or subsection</div><div>(1) of Section 272BBB or] clause (b) of</div><div>subsection (1) or clause (b) or clause</div><div>(c) of subsection (2) of Section 273, no</div><div>Page 19 of 31</div><div>penalty shall be imposable on the</div><div>person or the assessee, as the case</div><div>may be, for any failure referred to in</div><div>the said provisions if he proves that</div><div>there was reasonable cause for the said</div><div>failure.</div><div>Section 276B of the Act</div><div>276B. Failure to pay tax to the credit</div><div>of Central Government under Chapter</div><div>XIID or XVIIB.—If a person fails to</div><div>pay to the credit of the Central</div><div>Government,—</div><div>(a) the tax deducted at source by him</div><div>as required by or under the provisions</div><div>of Chapter XVIIB; or</div><div>(b) the tax payable by him, as required</div><div>by or under,—</div><div>(i) subsection (2) of Section 115O; or</div><div>(ii) the second proviso to Section 194B,</div><div>he shall be punishable with rigorous</div><div>imprisonment for a term which shall</div><div>not be less than three months but</div><div>which may extend to seven years and</div><div>with fine.”</div><div>7.5 At the outset, it is required to be noted that</div><div>all these cases are with respect to the belated</div><div>remittance of the TDS though deducted by</div><div>the assessee and therefore, Section 271C(1)(a)</div><div>shall be applicable. At the cost of repetition, it</div><div>is observed that it is a case of belated</div><div>Page 20 of 31</div><div>remittance of the TDS though deducted by</div><div>the assessee and not a case of nondeduction</div><div>of TDS at all. </div><div>7.6 As per Section 271C(1)(a), if any person fails</div><div>to deduct the whole or any part of the tax as</div><div>required by or under the provisions of</div><div>Chapter XVIIB then such a person shall be</div><div>liable to pay by way of penalty a sum equal to</div><div>the amount of tax which such person failed to</div><div>deduct or pay as aforesaid. So far as failure to</div><div>pay the whole or any part of the tax is</div><div>concerned, the same would be with respect to</div><div>Section 271C(1)(b) which is not the case here.</div><div>Therefore, Section 271C(1)(a) shall be</div><div>applicable in case of a failure on the part of</div><div>the concerned person/assessee to “deduct”</div><div>the whole of any part of the tax as required by</div><div>Page 21 of 31</div><div>or under the provisions of Chapter XVIIB. The</div><div>words used in Section 271C(1)(a) are very</div><div>clear and the relevant words used are “fails to</div><div>deduct.” It does not speak about belated</div><div>remittance of the TDS. As per settled position</div><div>of law, the penal provisions are required to be</div><div>construed strictly and literally. As per the</div><div>cardinal principle of interpretation of statute</div><div>and more particularly, the penal provision,</div><div>the penal provisions are required to be read</div><div>as they are. Nothing is to be added or nothing</div><div>is to be taken out of the penal provision.</div><div>Therefore, on plain reading of Section 271C of</div><div>the Act, 1961, there shall not be penalty</div><div>leviable on belated remittance of the TDS</div><div>after the same is deducted by the assessee.</div><div>Section 271C of the Income Tax Act is quite</div><div>categoric. Its scope and extent of application</div><div>Page 22 of 31</div><div>is discernible from the provision itself, in</div><div>unambiguous terms. When the nondeduction of the whole or any part of the tax,</div><div>as required by or under the various</div><div>instances/provisions of Chapter XVIIB would</div><div>invite penalty under Clause 271C(1)(a); only a</div><div>limited text, involving subsection (2) of</div><div>Section 115O or covered by the second</div><div>proviso to Section 194B alone would</div><div>constitute an instance where penalty can be</div><div>imposed in terms of Section 271C(1)(b) of the</div><div>Act, namely, on nonpayment. It is not for the</div><div>Court to read something more into it,</div><div>contrary to the intent and legislative wisdom. </div><div>7.7 At this stage, it is required to be noted that</div><div>wherever the Parliament wanted to have the</div><div>consequences of nonpayment and/or belated</div><div>remittance/payment of the TDS, the</div><div>Page 23 of 31</div><div>Parliament/Legislature has provided the</div><div>same like in Section 201(1A) and Section</div><div>276B of the Act. </div><div>7.8 Section 201(1A) provides that in case a tax</div><div>has been deducted at source but the same is</div><div>subsequently remitted may be belatedly or</div><div>after some days, such a person is liable to</div><div>pay the interest as provided under Section</div><div>201(1A) of the Act. The levy of interest under</div><div>Section 201(1A) thus can be said to be</div><div>compensatory in nature on belated</div><div>remittance of the TDS after deducting the</div><div>same. Therefore, consequences of nonpayment/belated remittance/payment of the</div><div>TDS are specifically provided under Section</div><div>201(1A).</div><div>7.9 Similarly, Section 276B talks about the</div><div>prosecution on failure to pay the TDS after</div><div>Page 24 of 31</div><div>deducting the same. At this stage, it is</div><div>required to be noted that Section 271C has</div><div>been amended subsequently in the year 1997</div><div>providing Sections 271C(1)(a) and 271C(1)(b).</div><div>As observed hereinabove, fails to pay the</div><div>whole or any part of the tax would be falling</div><div>under Section 271C(1)(b) and the word used</div><div>between 271C(1)(a) and 271C(1)(b) is “or”. At</div><div>this stage, it is required to be noted that</div><div>Section 276B provides for prosecution in case</div><div>of failure to “pay” tax to the credit of Central</div><div>Government. The word “pay” is missing in</div><div>Section 271C(1)(a). </div><div>8. Now so far as the reliance placed upon the</div><div>CBDT’s Circular No. 551 dated 23.01.1998 by</div><div>learned ASG is concerned, at the outset, it is</div><div>required to be noted that the said circular as</div><div>such favours the assessee. Circular No. 551</div><div>Page 25 of 31</div><div>deals with the circumstances under which</div><div>Section 271C was introduced in the Statute,</div><div>for levy of penalty. Paragraph 16.5 of the</div><div>above Circular reads as follows:</div><div>“16.5: Insertion of a new section</div><div>271C to provide for levy of penalty</div><div>for failure to deduct tax at sourceunder the old provisions of Chapter</div><div>XXI of the Income Tax Act no</div><div>penalty was provided for failure to</div><div>deduct tax at source. This default,</div><div>however, attracted prosecution</div><div>under the provisions of Section</div><div>276B, which prescribed punishment</div><div>for failure to deduct tax at source or</div><div>after deducting failure to pay the</div><div>same to the Government. It was</div><div>decided that the first part of the</div><div>default, i.e., failure to deduct tax at</div><div>source should be made liable to levy</div><div>of penalty, while the second part of</div><div>the default, i.e., failure to pay the</div><div>tax deducted at source to the</div><div>Government which is a more serious</div><div>offence, should continue to attract</div><div>prosecution. The Amending Act,</div><div>1987 has accordingly inserted a new</div><div>Section 271C to provide for</div><div>imposition of penalty on any person</div><div>who fails to deduct tax at source as</div><div>required under the provisions of</div><div>Chapter XVIIB of the Act. The</div><div>penalty is of a sum equal to the</div><div>Page 26 of 31</div><div>amount of tax which should have</div><div>been deducted at source.</div><div>On fair reading of said CBDT’s circular, it</div><div>talks about the levy of penalty on failure to</div><div>deduct tax at source. It also takes note of the</div><div>fact that if there is any delay in remitting the</div><div>tax, it will attract payment of interest under</div><div>Section 201(1A) of the Act and because of the</div><div>gravity of the mischief involved, it may involve</div><div>prosecution proceedings as well, under</div><div>Section 276B of the Act. If there is any</div><div>omission to deduct the tax at source, it may</div><div>lead to loss of Revenue and hence remedial</div><div>measures have been provided by</div><div>incorporating the provision to ensure that tax</div><div>liability to the said extent would stand shifted</div><div>to the shoulders of the party who failed to</div><div>effect deduction, in the form of penalty. On</div><div>Page 27 of 31</div><div>deduction of tax, if there is delay in remitting</div><div>the amount to Revenue, it has to be satisfied</div><div>with interest as payable under</div><div>Section 201(1A) of the Act, besides the</div><div>liability to face the prosecution proceedings, if</div><div>launched in appropriate cases, in terms of</div><div>Section 276B of the Act. </div><div>Even the CBDT has taken note of the fact</div><div>that no penalty is envisaged under Section</div><div>271C of the Income Tax Act for nondeduction TDS and no penalty is envisaged</div><div>under Section 271C for belated</div><div>remittance/payment/deposit of the TDS. </div><div>8.1 Even otherwise, the words “fails to deduct”</div><div>occurring in Section 271C(1)(a) cannot be</div><div>read into “failure to deposit/pay the tax</div><div>deducted.”</div><div>Page 28 of 31</div><div>8.2 Therefore, on true interpretation of Section</div><div>271C, there shall not be any penalty leviable</div><div>under Section 271C on mere delay in</div><div>remittance of the TDS after deducting the</div><div>same by the concerned assessee. As observed</div><div>hereinabove, the consequences on nonpayment/belated remittance of the TDS</div><div>would be under Section 201(1A) and Section</div><div>276B of the Act, 1961.</div><div>9. In view of the above in all these cases as the</div><div>respective assessees remitted the TDS though</div><div>belatedly and it is not case of nondeduction</div><div>of the TDS at all they are no liable to pay the</div><div>penalty under Section 271C of the Income</div><div>Tax Act. Therefore, any question on</div><div>Page 29 of 31</div><div>applicability of Section 273B of the Act is not</div><div>required to be considered any further. </div><div>10. In view of the above and for the reasons</div><div>stated above, all these appeals succeed.</div><div>Impugned judgment(s) and order(s) passed by</div><div>the High Court are hereby quashed and set</div><div>aside and the question of law on</div><div>interpretation of Section 271C of the Income</div><div>Tax Act is answered in favour of the</div><div>assessee(s) and against the Revenue and it is</div><div>specifically observed and held that on mere</div><div>belated remitting the TDS after deducting the</div><div>same by the concerned person/assessee, no</div><div>penalty shall be leviable under Section 271C</div><div>Page 30 of 31</div><div>of the Income Tax Act. Present appeals are</div><div>accordingly allowed. No costs. </div><div>………………………………….J.</div><div>[M.R. SHAH]</div><div>………………………………….J.</div><div>[C.T. RAVIKUMAR]</div><div>NEW DELHI;</div><div>APRIL 10, 2023</div><div>Page 31 of 31</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-8693398812872740492023-04-10T06:09:00.003-07:002023-04-10T06:09:21.975-07:00M/s Reckitt Benckiser (India) Ltd. VERSUS Commissioner Commercial Taxes & Ors<div>M/s Reckitt Benckiser (India) Ltd. VERSUS Commissioner Commercial Taxes & Ors</div><div><br /></div>
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<p style="text-align: justify;"><b><a href="https://www.indianconstitution.in/p/landmark-judgments.html">Landmark Cases</a> of India / </b><span style="text-align: left;"><b><a href="https://www.indianconstitution.in/2021/09/100-100-landmark-cases-of-supreme-court.html">सुप्रीम कोर्ट के ऐतिहासिक फैसले</a></b></span></p>
<div><br /></div><div><br /></div><div><br /></div><div>REPORTABLE</div><div>IN THE SUPREME COURT OF INDIA</div><div>CIVIL APPELLATE JURISDICTION</div><div> </div><div> </div><div>CIVIL APPEAL NO.1335 OF 2010</div><div>M/s Reckitt Benckiser (India) Ltd. ..Appellant</div><div> </div><div>VERSUS</div><div>Commissioner Commercial </div><div>Taxes & Ors. ..Respondents</div><div>J U D G M E N T</div><div>M. R. Shah, J.</div><div>Civil Appeal No.1335 of 2010 Page 1 of 32</div><div>1. Feeling aggrieved and dissatisfied with the</div><div>impugned judgment and order dated 17.12.2008</div><div>passed by the High Court of Kerala at Ernakulam</div><div>in OT Appeal No.6 of 2006 by which the High</div><div>Court has dismissed the said appeal and has</div><div>upheld the order passed by the Commissioner</div><div>with respect to the classification of the goods in</div><div>question, the assessee has preferred the present</div><div>appeal.</div><div>2. At the outset, it is required to be noted that the</div><div>issue pertains to the classification of the</div><div>appellant’s products namely (i) Mosquito Mats,</div><div>Coils and Vaporizers; and (ii) Mortein Insect</div><div>Killers; (iii) Harpic Toilet Cleaner and Lizol Floor</div><div>Cleaners; and (iv) Dettol Antiseptic Liquid for the</div><div>purposes of Kerala VAT Act, 2003 (hereinafter</div><div>referred to as “KVAT Act”). It was the case on</div><div>behalf of the appellant that the products at (i) to</div><div>(iii) were classifiable under Entry No. 44(5) of the</div><div>III Schedule to the Kerala VAT Act as being</div><div>'pesticides, insecticides' corresponding to HSN</div><div>Civil Appeal No.1335 of 2010 Page 2 of 32</div><div>Code 3808 and therefore subject to VAT at the</div><div>rate of 4%. With respect to the product at (iv)</div><div>hereinabove, it was the case on behalf of the</div><div>appellant that 'Dettol Antiseptic Liquid' is</div><div>correctly classifiable under Entry 36(8) (h) (vi)</div><div>being medicaments corresponding to HSN Code</div><div>3004.90 of the III Schedule, and thus also</div><div>subject to tax at the rate of 4%.</div><div>2.1 However, the Commissioner of Commercial</div><div>Taxes, rejected the contention of the appellant</div><div>holding that the products (i) Mortein Mosquito</div><div>Coil, Mat and Liquid Vaporizer is classifiable</div><div>under Entry 66 of Notification SRO 82/06 dated</div><div>21.01.2006 issued under Section 6(1)(d) of the</div><div>Kerala VAT Act which covers "Mosquito</div><div>Repellants, electric or electronic mosquito</div><div>repellants, gadgets and insect repellants, devices</div><div>and parts and accessories thereof” corresponding</div><div>to HSN Code 8516 79 20; (ii) Mortein Insect Killer</div><div>is subject to tax at the rate of 12.5% under the</div><div>residuary entry i.e. under SL No.103 of the</div><div>Civil Appeal No.1335 of 2010 Page 3 of 32</div><div>Notification SRO 82/06 on the ground that they</div><div>are not specifically classifiable under the Second</div><div>and the Third Schedule; (iii) Harpic Toilet Cleaner</div><div>and Lizol Floor Cleaner are classifiable under SI</div><div>No. 27(4) of the said Notification SRO 82/06; and</div><div>(iv) Dettol Antiseptic Liquid is classifiable under</div><div>Entry 103 of the said Notification SRO 82/06 i.e.</div><div>residual entry on the ground that the said</div><div>product is not in the nature of a medicine having</div><div>therapeutic or prophylactic properties, but is</div><div>used only for cleaning purposes.</div><div>2.2 The order passed by the Commissioner of</div><div>Commercial Taxes holding the above was the</div><div>subject matter of appeal before the High Court.</div><div>The High Court by the impugned judgment and</div><div>order has dismissed the said appeal confirming</div><div>the order passed by the Commissioner of</div><div>Commercial Taxes. The impugned judgment and</div><div>order passed by the High Court is the subject</div><div>matter of the present appeal.</div><div>Civil Appeal No.1335 of 2010 Page 4 of 32</div><div>2.3 Before we consider the submissions made on</div><div>behalf of the respective parties the relevant</div><div>entries relied upon by the respective parties are</div><div>required to be referred to which are as under:</div><div>“Entry 44 of the Third Schedule reads as follows:</div><div>Sl. No. Description HSN Code</div><div>44 Fertilizers, pesticides,</div><div>weedicides, insecticides,</div><div>fungicides, herbicides,</div><div>rodenticides, antisprouting products and</div><div>plant growth regulators,</div><div>biofertilizers,</div><div>micronutrients and</div><div>similar products</div><div>5 Pesticides, weedicides,</div><div>insecticides, 3808</div><div>fungicides, herbicides,</div><div>rodenticides, antisprouting products and</div><div>plant growth regulators,</div><div>and similar products</div><div>other than micro products</div><div>3808</div><div>Civil Appeal No.1335 of 2010 Page 5 of 32</div><div>(d) Entry 36(8)(h)(vi) of the Third Schedule reads</div><div>as under:</div><div>Sl. No. Description HSN</div><div>Code</div><div>36 Drugs, Medicines and</div><div>Bulk Drugs including</div><div>Ayurvedic, Unani, and</div><div>Homoeopathic</div><div>medicine but</div><div>excluding mosquito</div><div>repellants and those</div><div>specifically mentioned</div><div>in First Schedule and</div><div>those notified under</div><div>clause (d) of subsection (1) of section</div><div>6.</div><div>8 Medicaments</div><div>(excluding goods of</div><div>HSN heading nos.</div><div>3002, 3005, or 3006)</div><div>consisting of mixed or</div><div>unmixed products for</div><div>therapeutic or</div><div>prophylactic uses, put</div><div>up in measured doses</div><div>(including those in the</div><div>Civil Appeal No.1335 of 2010 Page 6 of 32</div><div>form of transdermal</div><div>administration</div><div>systems) or in forms</div><div>or packings for retail</div><div>sale</div><div>h Other</div><div>(vi) Medicaments other</div><div>than those given in</div><div>subentries (i) to (v)</div><div>3004.90</div><div>Entry 66 of Notification No. SRO No. 82/2006,</div><div>G.O.(P) No. 4/2006/TD Dated 21st January 2006.</div><div>LIST OF GOODS</div><div>SL.NO. Description of</div><div>goods</div><div>HSN Code</div><div>(1) (2) (3)</div><div>66 Mosquito repellents,</div><div>electric or electronic</div><div>mosquito repellents,</div><div>gadgets and insect</div><div>repellents, devices</div><div>and parts and</div><div>accessories thereof</div><div>8516.79.20</div><div>Civil Appeal No.1335 of 2010 Page 7 of 32</div><div>3. Shri Siddharth Bawa, learned counsel has</div><div>appeared on behalf of the appellant and Shri C.K.</div><div>Sasi, learned counsel has appeared on behalf of</div><div>the respondents.</div><div>4. Learned counsel appearing on behalf of the</div><div>appellant has vehemently submitted that in the</div><div>facts and circumstances of the case the High</div><div>Court has materially erred in not accepting the</div><div>case on behalf of the appellant that the products</div><div>item nos.1 to 3 hereinabove shall be classifiable</div><div>under Entry 44(5) of III Schedule of KVAT Act.</div><div>4.1 It is submitted that the High Court has materially</div><div>erred in accepting the case on behalf of the</div><div>Commissioner that the aforesaid products nos. (i)</div><div>to (iii) shall fall under Item No.66 of SRO</div><div>82/2006 and therefore liable to be taxed at</div><div>12.5%</div><div>4.2 It is further submitted that the High Court has</div><div>also erred in holding that the product Dettol will</div><div>fall under the residual entry i.e. Sl.No.103 of SRO</div><div>Civil Appeal No.1335 of 2010 Page 8 of 32</div><div>82/2006 and not under Entry 36(8) (h) (vi) of III</div><div>Schedule of the KVAT Act.</div><div>4.3 Now so far as the product Mortein range &</div><div>Mortein Spray is concerned, it is vehemently</div><div>submitted by learned counsel appearing on</div><div>behalf of the appellant that even after</div><div>introduction of SRO 82/2006, Mortein range &</div><div>Mortein Spray continue to be classifiable as</div><div>insecticides, as they are manufactured under an</div><div>insecticides license issued under the Insecticides</div><div>Act. It is submitted that the Mortein Spray kills</div><div>insects, hence even according to the respondents’</div><div>interpretation, Mortein Spray cannot fall under</div><div>Item No.66 of SRO/2006, as Item no.66 deals</div><div>only with Mosquito repellants. </div><div>4.4 In support of his submissions learned counsel</div><div>appearing on behalf of the appellant has heavily</div><div>relied upon the decision of this Court in the case</div><div>of Ponds India Ltd. vs. CTT (2008) 8 SCC 369</div><div>(Para 35). He has also relied upon the following</div><div>Civil Appeal No.1335 of 2010 Page 9 of 32</div><div>decisions of the Allahabad High Court and</div><div>Karnataka High Court; Knight Queen Industries</div><div>Pvt. Ltd. vs. State of UP, 2005 SCC Online All</div><div>1214 (Para 23 to 36); Sl. No. 22 @ page 282</div><div>297; Order dated 14.07.2006 passed by this</div><div>Court in State of UP vs. Knight Queen</div><div>Industries Pvt. Ltd.; Sl. No. 23 @ page 298</div><div>300; Ashok Agencies vs. State of Karnataka</div><div>2008 SCC Online Kar 141 (Para 8 to 12); Sl.</div><div>No. 24 @ page 301307; State of Karnataka vs.</div><div>Godrej Consumer Products Ltd. (2014) 80 Kar</div><div>LJ 328 (Para 15); Sl. No. 25 @ page 308313.</div><div>4.5 It is submitted by learned counsel appearing on</div><div>behalf of the appellant that it is a case on behalf</div><div>of the respondents that from 21.01.2006 Mortein</div><div>range and Mortein Spray would fall under Sl.</div><div>No.66 (mosquito repellant), which is the specific</div><div>entry and subject to VAT at 12.5% and</div><div>insecticide (Entry 44(5) of the III Schedule) is a</div><div>general entry. </div><div>Civil Appeal No.1335 of 2010 Page 10 of 32</div><div>It is submitted that therefore the issue of</div><div>classification between two competing entries i.e.</div><div>Entry 44(5)(insecticide) and Sl. No.66 (mosquito</div><div>repellant) introduced w.e.f. 21.01.2006. It is</div><div>submitted that therefore according to Revenue,</div><div>the judgment of the High Court with respect of</div><div>Mortein repellant /Moretin range shall not be</div><div>applicable, as the entries under the other VAT</div><div>Acts, do not have a specific entry for “mosquito</div><div>repellents”.</div><div>4.6 It is submitted that however the appellant rightly</div><div>relied upon Entry 44(5) of the said Schedule</div><div>claiming the tax at 4%.</div><div>4.7 So far as the product Harpic & Lizol is concerned,</div><div>it is the case on behalf of the appellant that the</div><div>State of Kerala issued a notification dated</div><div>24.10.2006 retrospectively effective from</div><div>07.01.2006 omitting HSN Code 3808 from Entry</div><div>44(5) of III Schedule of KVAT Act. It is submitted</div><div>that Harpic & Lizol would still continue to fall in</div><div>Entry 44(5) even after deletion of HSN Code 3808,</div><div>Civil Appeal No.1335 of 2010 Page 11 of 32</div><div>as they are disinfectants under the Drugs &</div><div>Cosmetics Act/Rules and manufactured under</div><div>the licence granted as a disinfectant, under the</div><div>said act. In support of the above, he has relied</div><div>upon the decision of this Court in the case of</div><div>Ponds India Ltd. (supra) and Bombay</div><div>Chemicals Pvt. Ltd. vs. CCE 1995 Supp. (2)</div><div>SCC 646 and the decision of the Andhra Pradesh</div><div>High Court in the case of Reckitt Benckiser</div><div>India Ltd. vs. State of Andhra Pradesh in Tax</div><div>Revision Case No.10 of 2007.</div><div>4.8 Now so far as the product Dettol is concerned, it</div><div>is the case on behalf of the appellant that the</div><div>Dettol is an antiseptic liquid, manufactured</div><div>under a Drug License and it prevents infection.</div><div>It is submitted that it is considered as an</div><div>essential drug and hence its price was controlled</div><div>under DPCO and the MRP of Dettol continues to</div><div>be monitored under DPCO, 2013.</div><div>Civil Appeal No.1335 of 2010 Page 12 of 32</div><div>4.9 It is submitted that Dettol falls under HSN 3004</div><div>90 specifically incorporated in Entry 36(8)(h)(vi) of</div><div>Schedule III, therefore Dettol is classifiable as a</div><div>drug/medicine under Entry 36(8)(h)(vi) of</div><div>Schedule III. It is submitted that in Note 23 of</div><div>the Rules of interpretation under Entry 36 of</div><div>Schedule III, the only exclusion is dietary food,</div><div>diabetic food, food supplements, medicated</div><div>soaps, blood albumin etc. are not excluded.</div><div>4.10 It is further submitted that most importantly</div><div>HSN Code was not deleted from Entry 36(8)(h)(vi)</div><div>of Schedule III, even though by virtue of</div><div>notification K.G. Ext.NO.1670 dated 24.10.2006</div><div>(retrospectively effective from 01.07.2006), HSN</div><div>Code was deleted in Entry 44(5) of Schedule III</div><div>under which the appellant has classified Mortein</div><div>range, Mortein spray, Harpic & Lizol. It is</div><div>submitted that therefore the Dettol continue to</div><div>fall under Entry 36(8)(h)(vi).</div><div>4.11 It is further submitted that the active ingredients</div><div>of Dettol are Chloroxylenol IP, Terpineol BP,</div><div>Civil Appeal No.1335 of 2010 Page 13 of 32</div><div>Alcohol Absolute IP (denatured) and it is an</div><div>antiseptic having germicidal properties; it kills</div><div>germs, bacteria and it prevents infection</div><div>therefore it is applied on wounds, cuts, grazes,</div><div>bites and stings and is used in hospitals for</div><div>surgical use, medical use and midwifery, due to</div><div>therapeutic & prophylactic properties.</div><div>4.12 It is submitted that this Court in the case of ICPA</div><div>Health Products (P) Ltd. vs. CCE, Vadodara</div><div>(2004) 4 SCC 481 has held that the said</div><div>products are used for disinfecting the skin prior</div><div>to surgery. It is submitted that as per Concise</div><div>Oxford Dictionary, 9th Edition the term</div><div>“prophylactic” would mean, “intending to prevent</div><div>diseases, a preventive medicine or course of</div><div>action”. It is submitted that as the aforesaid</div><div>products are used as a cleanser for cleaning of</div><div>wounds and abrasions and minor cuts and to</div><div>disinfect the skin prior to surgery, they have</div><div>therapeutic and prophylactic properties. It is</div><div>submitted that applying the legal principles</div><div>Civil Appeal No.1335 of 2010 Page 14 of 32</div><div>enunciated by this Court qua Dettol, the Dettol is</div><div>a drug/medicine.</div><div>4.13 It is further submitted that this Court in the case</div><div>of Sujanil Chemo Industries vs. CCE &</div><div>Customs, Pune (2005) 4 SCC 189 (para 6) in</div><div>the context of Licel used for killing lice in human</div><div>hair has held that any medicine which kills</div><div>disease or is a palliative or curative is</div><div>therapeutic. It is submitted that Licel cures the</div><div>infection of lice in human hair and is thus</div><div>therapeutic. It is submitted that applying the</div><div>same the Dettol is also a medicament.</div><div>4.14 It is submitted that in the case of Ponds India</div><div>Ltd. (supra) in respect of the classification under</div><div>the Trade Tax/VAT Laws this Court has taken</div><div>into consideration the definition of ‘Drug’ as</div><div>defined under the Drugs & Cosmetics Act, 1940</div><div>and the fact that the product is sold under a drug</div><div>licence since drug or medicine is not defined</div><div>under the Trade Tax/VAT Laws. It is submitted</div><div>Civil Appeal No.1335 of 2010 Page 15 of 32</div><div>that the Dettol is manufactured under a drug</div><div>licence issued under the Drugs & Cosmetics</div><div>Rules and its price has been regulated by the</div><div>National Pharmaceutical Pricing Authority under</div><div>Drug Price Control Orders issued from time to</div><div>time including DPCO, 2013.</div><div>4.15 It is submitted that Rule 123 of the Drugs &</div><div>Cosmetics Rules provides for certain exceptions</div><div>to the drugs falling under Schedule K to the</div><div>extent provided therein. Entry 39 deals with</div><div>Liquid Antiseptics for household use. The</div><div>appellant submits that Dettol being an antiseptic</div><div>falls under Entry 39 of Schedule K provided</div><div>under Rule 123 of the Drugs & Cosmetics Rules.</div><div>It is submitted that this Court in the case of</div><div>Ponds India Ltd. (supra) has considered the</div><div>aforesaid aspect and had held that Vaseline</div><div>White Petroleum Jelly to be a drug as it falls</div><div>under Entry 28 of Schedule K provided under</div><div>Rule 123 of the Drugs & Cosmetics Act/Rules.</div><div>Civil Appeal No.1335 of 2010 Page 16 of 32</div><div>4.16 It is further submitted that the impugned</div><div>judgment fails to consider the well settled</div><div>principles of classification which are fundamental</div><div>to any matter relating to classification under a</div><div>taxing statute namely viz. (a) plain meaning to be</div><div>given to the taxing provision; (b) burden to prove</div><div>classification in a particular entry is always on</div><div>the Revenue; (c) any ambiguity has to be</div><div>resolved in favour of the assessee and in case of a</div><div>reasonable doubt, the construction most</div><div>beneficial to the assessee must be adopted; (d)</div><div>specific entry would override a residuary entry;</div><div>and (e) resort to residuary entry is to be taken as</div><div>a last measure, only when by liberal construction</div><div>the specific entry cannot cover the goods in</div><div>question.</div><div>4.17 It is further submitted that the Gawahati High</div><div>Court as well as the Rajasthan High Court in the</div><div>case of Reckitt Benckiser India Ltd. vs.</div><div>Assistant Commercial Taxes Officer & Ors.,</div><div>STR11/2012 have held Dettol to be a drug</div><div>Civil Appeal No.1335 of 2010 Page 17 of 32</div><div>under the respective entries of Assam VAT Act</div><div>and Rajasthan VAT Act and have rejected the</div><div>submission of the Revenue in those States that</div><div>the Dettol falls under the residuary entry. It is</div><div>submitted that the SLPs against the decision of</div><div>the Rajasthan High Court by the Revenue have</div><div>been dismissed by this Court.</div><div>5. Making above submissions and relying upon the</div><div>above decisions, it is prayed to allow the present</div><div>appeal.</div><div>6. While opposing the present appeal Shri Sasi,</div><div>learned counsel appearing on behalf of the</div><div>Revenue has vehemently submitted that the</div><div>product Mortein range and Mortein Spray would</div><div>not be classifiable under Entry No. 44(5) as</div><div>insecticides as contended on behalf of the</div><div>appellant. It is submitted that “Mortein Mosquito</div><div>coil, mat and liquid vaporizer” cannot be</div><div>classifiable as an insecticide and the same is</div><div>unsustainable in view of the decision of this</div><div>Court in the case of Sonic Electrochem vs.</div><div>Civil Appeal No.1335 of 2010 Page 18 of 32</div><div>STO, (1998) 6 SCC 397 wherein this Court has</div><div>held that the product ‘Jet Mat’ which is a trade</div><div>name containing ‘dAllethrin 4%’ and is</div><div>commercially known as “Mosquito Repellent Mat”</div><div>is a mosquito repellent notwithstanding the fact</div><div>that it not only repels the mosquitoes but also is</div><div>capable of killing the mosquitoes and it is difficult</div><div>to hold that it is an insecticide. It is submitted</div><div>that the product “Mortein Mosquito Coil, mat and</div><div>liquid vaporizer” would definitely come under</div><div>Entry 66 “Mosquito Repellent”.</div><div>6.1 It is submitted that the appellant – assessee is</div><div>relying Entry 44(5) in support of their case</div><div>products Mortein range and Mortein Spray shall</div><div>fall as insecticides under Entry 44(5). It is</div><div>submitted that Entry 44 related to products</div><div>which are used in agricultural operations. It is</div><div>submitted that all the products in that Entry are</div><div>used in the agricultural field in relation to</div><div>growing of agricultural products and controlling</div><div>Civil Appeal No.1335 of 2010 Page 19 of 32</div><div>of pets, insecticides etc. which attacked the</div><div>plants.</div><div>6.2 It is submitted that the product such as Harpic</div><div>Toilet Cleaner and Lizol Floor Cleaner are not</div><div>used in relation to controlling pets and</div><div>insecticides in the agricultural field. It is</div><div>submitted that the name of these products</div><div>contains the words “Toilet Cleaner and Floor</div><div>Cleaner”. It is submitted that the use of “Harpic</div><div>Toilet Cleaner” and “Lizol Floor Cleaner” is</div><div>exclusively for cleaning of toilet and floor</div><div>respectively and therefore cannot be treated as</div><div>insecticide.</div><div>6.3 It is submitted that so far as the reliance placed</div><div>upon the decision of this Court in the case of</div><div>Bombay Chemicals Pvt. Ltd. (supra) is</div><div>absolutely misplaced and shall not be applicable</div><div>in the facts of the instant case. It is submitted</div><div>that in the case of Bombay Chemical Pvt. Ltd.</div><div>(supra) this Court was dealing with Entry</div><div>Civil Appeal No.1335 of 2010 Page 20 of 32</div><div>“Insecticides, Pesticides, Weedicides and</div><div>Fungicides etc.” under the Central Exercise Salt</div><div>Act, 1944. It is submitted that the said Entry is</div><div>different from Entry 44 of the KVAT Act which are</div><div>products exclusively dealing with the products in</div><div>agricultural operations.</div><div>6.4 Now so far as the product Dettol antiseptic liquid</div><div>is concerned, it is submitted that the same</div><div>cannot be classified as an item used for</div><div>Medicament for therapeutic or prophylactic uses.</div><div>It is submitted that a medicament is an item</div><div>used for therapeutic or prophylactic treatment for</div><div>prevention and cure of diseases. It is submitted</div><div>that the High Court has specifically found that</div><div>the appellant has no case that Dettol is able to</div><div>prevent or cure any disease and therefore has</div><div>rightly held the Dettol is not a medicament. It is</div><div>submitted that therefore the Dettol would fall</div><div>under residuary Entry.</div><div>7. Making above submissions it is prayed to dismiss</div><div>the present appeal.</div><div>Civil Appeal No.1335 of 2010 Page 21 of 32</div><div>8. We have heard the learned counsel appearing on</div><div>behalf of the respective parties at length.</div><div>9. So far as the product Mosquito Mats, Coils and</div><div>Vaporizers and Mortein Insect Killers are</div><div>concerned, it is the case on behalf of the</div><div>appellant that the said products would fall in</div><div>Entry 44(5) of III Schedule of KVAT Act and</div><div>would fall under HSN Code 3808. Therefore, it is</div><div>the case on behalf of the appellant that the</div><div>aforesaid products shall be classifiable as</div><div>insecticides under Entry 44(5) and therefore</div><div>chargeable to tax at 4%. It is the case on behalf</div><div>of the appellant that as the aforesaid products</div><div>are manufactured under the licence granted</div><div>under the Insecticides Act and therefore the said</div><div>products can be said to be insecticides</div><div>classifiable under Entry 44(5). The aforesaid has</div><div>no substance. It is required to be noted that HSN</div><div>Code 3808 has been deleted from Entry 44(5)</div><div>Civil Appeal No.1335 of 2010 Page 22 of 32</div><div>w.e.f. 01.07.2006 and from 21.01.2006 the</div><div>aforesaid products would fall under Sl. No.66</div><div>namely ‘Mosquito repellant’, which is the specific</div><div>entry and subject to VAT at 12.5%. The</div><div>insecticides under Entry 44(5) therefore can be</div><div>said to be a general entry. Once there is a</div><div>specific entry the ‘Mosquito Repellant’, thereafter</div><div>one is not required to go to the definition under</div><div>another Act namely Insecticides Act. Sl.No.66 of</div><div>Notification SRO 82/06 dated 21.01.2006 issued</div><div>under Section 6(1)(d) of the Kerala VAT Act which</div><div>covers "Mosquito Repellants”.</div><div>9.1 Even otherwise it is required to be noted that</div><div>Entry 44(5) which includes insecticides relates to</div><div>products which are used in agricultural</div><div>operations. All the products in the Entry are</div><div>used in the agricultural field in relation to</div><div>growing of agricultural products and controlling</div><div>of pets, insecticides etc. which are attacking the</div><div>plants. Therefore, in view of the specific Entry 66</div><div>of Notification SRO 82/06 dated 21.01.2006 the</div><div>Civil Appeal No.1335 of 2010 Page 23 of 32</div><div>aforesaid products namely Mosquito Repellants,</div><div>electric or electronic mosquito repellants, gadgets</div><div>and insect repellants, devices and parts and</div><div>accessories thereof are rightly classified as</div><div>Mosquito repellants. Now so far as the reliance</div><div>placed upon the decision of this Court in the case</div><div>of Bombay Chemicals Pvt. Ltd. (supra) is</div><div>concerned, the said decision shall not be</div><div>applicable to the facts of the case on hand while</div><div>dealing with the specific entries under KVAT Act.</div><div>It was a case under the Central Excise Act and</div><div>the Entry corresponding to the Excise Act. In the</div><div>present case under the KVAT Act there is a</div><div>specific Entry Mosquito repellant so far as the</div><div>product electric or electronic mosquito repellents,</div><div>gadgets and insect repellents, devices and parts</div><div>and accessories thereof are concerned and</div><div>therefore the said specific entry shall be</div><div>applicable in any case, the same cannot be said</div><div>to be insecticides. We are in complete agreement</div><div>with the view taken by the High Court that</div><div>Civil Appeal No.1335 of 2010 Page 24 of 32</div><div>Mosquito Mats, Coils and Vaporizers and Mortein</div><div>Insect Killers products shall not be classifiable</div><div>under Entry 44(5) as insecticides. </div><div>9.2 Now so far as the products Harpic and Lizol is</div><div>concerned, it is the case on behalf of the</div><div>appellant that the same is classifiable under</div><div>Entry 44(5) of III Schedule of KVAT Act HSN</div><div>Code 3808 and the said products are also</div><div>classifiable as insecticides. </div><div>9.3 However, it is required to be noted that after</div><div>introduction of SRO 82/06 w.e.f. 22.01.2006 the</div><div>Harpic and Lizol would fall under Sl. No. 27(4) of</div><div>SRO 82/06. Sl. No.27(4) thus is a specific entry.</div><div>9.4 Even the High Court has also considered the use</div><div>of the aforesaid two products. The aforesaid two</div><div>products are used for cleaning the floor and</div><div>toilet. As noted by the High Court and even from</div><div>the product description and the nature of use</div><div>stated in the products, the said two items are</div><div>essentially used as stain removers and</div><div>deodorants. Merely because they kill germs as</div><div>Civil Appeal No.1335 of 2010 Page 25 of 32</div><div>well, the same cannot be said to be insecticides</div><div>classifiable under Entry 44(5). What is required</div><div>to be considered is the dominant use which is</div><div>cleaning and removal of stains of floor and the</div><div>toilet. Thereafter, the same shall not fall under</div><div>Entry 44(5) – HSN Code No.3808 as insecticides</div><div>or disinfectant. Entry 27(4) of SRO No. 82 of</div><div>2006 is with respect to stain busters, stain</div><div>removers, abir, blue and all kinds of cleaning</div><div>powder and liquids including floor and toilet</div><div>cleaning. In that view of the matter Entry 27(4)</div><div>being a specific entry the same shall be</div><div>applicable and the aforesaid two products namely</div><div>Harpic and Lizol shall not be classifiable under</div><div>general Entry 44(5) and in any case the same</div><div>cannot be classifiable under Entry 44(5) as</div><div>insecticides. We are in complete agreement with</div><div>the view taken by the High Court that the</div><div>product Harpic and Lizol shall not be classifiable</div><div>under Entry 44(5) and shall be classifiable under</div><div>Civil Appeal No.1335 of 2010 Page 26 of 32</div><div>Entry 27(4) of SRO 82/2006 chargeable to tax at</div><div>12.5%.</div><div>9.5 However, so far as the product Dettol is</div><div>concerned, it is the case on behalf of the</div><div>appellant that Dettol is an Antiseptic Liquid and</div><div>therefore is classifiable as a drug/medicine under</div><div>Entry 36(8)(h)(vi). The active ingredients of Dettol</div><div>are Chloroxylenol IP, Terpineol BP, Alcohol</div><div>Absolute IP (denatured) and it is an antiseptic</div><div>having germicidal properties and it kills germs,</div><div>bacteria and it prevents infection therefore it is</div><div>applied on wounds, cuts, grazes, bites and stings.</div><div>It is also used in hospitals for surgical use and</div><div>medical use.</div><div>9.6 Thus the Dettol is used as an antiseptic liquid</div><div>and is used in hospitals for surgical use, medical</div><div>use and midwifery, due to therapeutic &</div><div>prophylactic properties. Therefore, the same can</div><div>be said to be an item of medicament to be treated</div><div>as a drug and medicine. Here also the dominant</div><div>use is a relevant consideration.</div><div>Civil Appeal No.1335 of 2010 Page 27 of 32</div><div>9.7 In the case of Ponds India Ltd. (supra) this</div><div>Court has held that while deciding the issue</div><div>whether any particular item would be covered</div><div>under relevant entry or classification, different</div><div>tests viz. the dictionary meaning, technical</div><div>meaning, user’s point of view, popular meaning</div><div>etc. are to be applied. In paragraphs 35 & 38 it</div><div>is observed and held as under:</div><div>“35…..while interpreting an entry in a</div><div>taxing statute, the court’s role would be to</div><div>consider the effect thereof upon</div><div>considering the same from different</div><div>angles. Different tests are laid down for</div><div>interpretation of an entry in a taxing</div><div>statute, namely, dictionary meaning,</div><div>technical meaning, user’s point of view,</div><div>popular meaning, etc.”</div><div>XXX XXX XXX</div><div>“38. Whether a product would be a drug or</div><div>a cosmetic sometimes poses a difficult</div><div>question and, thus, answer thereto may</div><div>not be easy. For the said purpose, the</div><div>court may not only be required to consider</div><div>the contents thereof, but also the history</div><div>of the entry, the purpose for which the</div><div>product is used, the manner in which it</div><div>Civil Appeal No.1335 of 2010 Page 28 of 32</div><div>has been dealt with under the relevant</div><div>statute as also the interpretation thereof</div><div>by the implementing authorities.”</div><div>9.8 Thus, as per the settled position of law while</div><div>considering a particular entry the principles of</div><div>classification which are fundamental to any</div><div>matter relating to classification under the taxing</div><div>statute are:</div><div>(a) plain meaning to be given to the taxing</div><div>provision; </div><div>(b) burden to prove classification in a particular</div><div>entry is always on the Revenue; </div><div>(c) any ambiguity has to be resolved in favour of</div><div>the assessee and in case of a reasonable doubt,</div><div>the construction most beneficial to the assessee</div><div>must be adopted; </div><div>(d) specific entry would override a residuary</div><div>entry; and </div><div>(e) resort to residuary entry is to be taken as a</div><div>last measure, only when by liberal construction</div><div>the specific entry cannot cover the goods in</div><div>question.</div><div>Civil Appeal No.1335 of 2010 Page 29 of 32</div><div>9.9 At this stage it is required to be noted that the</div><div>Guwahati High Court and the Rajasthan High</div><div>Court have held the Dettol to be a drug under the</div><div>respective entries of Assam VAT Act and</div><div>Rajasthan VAT Act and have rejected the</div><div>submission of the Revenue that the Dettol falls</div><div>under the residuary entry. It is to be noted</div><div>against the decision of the Rajasthan High Court,</div><div>the Revenue had preferred the SLPs before this</div><div>Court which are dismissed by this Court.</div><div>9.10 In view of the above and considering the</div><div>dominant use of Dettol and the active ingredients</div><div>of Dettol referred to hereinabove and that the</div><div>Dettol is used as an antiseptic and is used in</div><div>hospitals for surgical use, medical use and</div><div>midwifery due to therapeutic & prophylactic</div><div>properties the same would fall under Entry 36(8)</div><div>(h) (vi) as claimed by the appellant and would not</div><div>fall under the residuary entry as claimed by the</div><div>Revenue. To that extent the impugned judgment</div><div>Civil Appeal No.1335 of 2010 Page 30 of 32</div><div>and order passed by the High Court deserves to</div><div>be quashed and set aside.</div><div>10. In view of the above and for the reason stated</div><div>above, present appeal succeeds in part. The</div><div>impugned judgment and order passed by the</div><div>High Court in so far as the products Mosquito</div><div>Mats, Coils and Vaporizers and Mortein Insect</div><div>Killers; Harpic Toilet Cleaner and Lizol Floor</div><div>Cleaners is hereby confirmed. So far as the</div><div>impugned judgment and order passed by the</div><div>High Court with respect to Dettol Antiseptic</div><div>Liquid is concerned, the impugned judgment and</div><div>order passed by the High Court is set aside and it</div><div>is held that the product Dettol would fall under</div><div>Entry 36(8) (h)(vi) of Schedule III of the KVAT Act</div><div>and shall be liable to be taxed at 4%.</div><div>Present appeal is accordingly partly allowed to</div><div>the aforesaid extent. However, in the facts and</div><div>Civil Appeal No.1335 of 2010 Page 31 of 32</div><div>circumstances of the case there shall be no order</div><div>as to costs.</div><div>…………………………………J.</div><div> (M. R. SHAH)</div><div>…………………………………J.</div><div> (KRISHNA MURARI)</div><div>New Delhi, </div><div>April 10, 2023</div><div>Civil Appeal No.1335 of 2010 Page 32 of 32</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4608846023384910959.post-40657114884607798952023-04-10T06:02:00.004-07:002023-04-10T06:02:37.463-07:00NTPC LTD. VERSUS M/S SPML INFRA LTD.<div>NTPC LTD. VERSUS M/S SPML INFRA LTD. </div><div><br /></div>
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<div><br /></div><div><br /></div><div>Page 1 of 27</div><div>REPORTABLE</div><div>IN THE SUPREME COURT OF INDIA</div><div>CIVIL APPELLATE JURISDICTION</div><div>CIVIL APPEAL No. 4778 of 2022</div><div>NTPC LTD. ....APPELLANT</div><div>VERSUS</div><div>M/S SPML INFRA LTD. ...RESPONDENT</div><div>J U D G M E N T</div><div>PAMIDIGHANTAM SRI NARASIMHA, J.</div><div>1. The present appeal arises out of a decision of the High Court</div><div>of Delhi1, allowing the Respondent’s application under Section</div><div>11(6) of the Arbitration and Conciliation Act, 19962 for the</div><div>constitution of an Arbitral Tribunal. It is the case of Appellant</div><div>NTPC that there were no subsisting disputes between the parties</div><div>in view of the Settlement Agreement dated 27.05.2020 and that</div><div>the application for arbitration is an afterthought and abuse of the</div><div>process.</div><div>2. By an order dated 15.07.2022, this Court, while granting</div><div>leave, stayed all further proceedings before the Arbitral Tribunal.</div><div>1 In ARBP No. 477/2020, dated 08.04.2021.</div><div>2 hereinafter ‘the Act’.</div><div>Page 2 of 27</div><div>Short facts giving rise to the filing of the petition under Section 11</div><div>of the Act and leading to the impugned decision of the High Court</div><div>are as follows.</div><div>3. Facts: The Appellant and Respondent, hereinafter referred</div><div>to as NTPC and SPML respectively, entered into a contract for</div><div>“Installation Services for Station Piping Package for Simhadri Super</div><div>Thermal Power Project Stage II at NTPC at Simhadri,</div><div>Vishakapatnam”. In terms of the contract agreement, SPML</div><div>furnished Performance Bank Guarantees and Advanced Bank</div><div>Guarantees3 for Rs. 14,96,89,136/- to secure the Appellant.</div><div>4. Pursuant to the successful completion of the project, a</div><div>Completion Certificate was issued by NTPC on 27.03.2019. By its</div><div>letter dated 10.04.2019, NTPC informed SPML that the final</div><div>payment under the contract would be released upon the receipt of</div><div>a No-Demand Certificate from SPML. The No-Demand Certificate</div><div>was issued by SPML on 12.04.2019 and NTPC also released the</div><div>final payment amounting to Rs. 1,40,00,000/- in April 2019. The</div><div>Bank Guarantees were however withheld.</div><div>3 hereinafter referred to as ‘Bank Guarantees’.</div><div>Page 3 of 27</div><div>5. On 14.05.2019, NTPC informed SPML that the Bank</div><div>Guarantees were withheld on account of pending liabilities and</div><div>disputes between the parties with respect to other projects at</div><div>Bongaigon, Barh, and Korba. SPML naturally protested. By its</div><div>letter dated 15.05.2019, SPML informed NTPC that the retention</div><div>of Bank Guarantees, despite issuance of the Completion Certificate</div><div>and the No-Demand Certificate, by linking them to some other</div><div>projects, was unjustified. Following the protest, SPML raised a</div><div>demand of Rs. 72,01,53,899/- from NTPC as liabilities recoverable</div><div>for actions attributable to NTPC under this very contract.</div><div>6. By its letter dated 12.06.2019, SPML called upon NTPC to</div><div>appoint an Adjudicator for resolving pending disputes in terms of</div><div>the General and Special Conditions of Contract. As no action was</div><div>taken by NTPC, SPML moved the Delhi High Court by filing Writ</div><div>Petition No. 7213 of 2019 under Article 226 of the Constitution, for</div><div>the release of the Bank Guarantees. The prayer in the Writ Petition</div><div>is to:</div><div>“(a) Pass an appropriate Writ, Order or Direction</div><div>quashing the e-mail dated 14.05.2019 issued by the</div><div>Respondent insofar as it pertains to the release of the</div><div>Bank Guarantees being (a) 0040ILG002609, (b)</div><div>0040ILG001109, (C) 0040ILG001209, (d)</div><div>0040ILG001309 and direct the Respondent to release</div><div>the aforesaid Bank Guarantees forthwith, and</div><div>Page 4 of 27</div><div>(b) Pass any other order or such other orders as may be</div><div>necessary in the interests of justice, equity and good</div><div>conscience.”</div><div>7. While issuing notice, the High Court, by its interim order</div><div>dated 08.07.2019, directed NTPC not to encash the Bank</div><div>Guarantees, and further directed SPML to keep the Bank</div><div>Guarantees alive.</div><div>8. Pending the Writ Petition, negotiations between the parties</div><div>culminated in a Settlement Agreement on 27.05.2020. Through</div><div>the Settlement Agreement, NTPC agreed to release the withheld</div><div>Bank Guarantees. SPML also agreed to withdraw its pending Writ</div><div>Petition and undertook not to initiate any other proceedings,</div><div>including arbitration, under the subject contract.</div><div>9. Following the Settlement Agreement, the Bank Guarantees</div><div>were released by NTPC on 30.06.2020. SPML withdrew the Writ</div><div>Petition, as recorded in the Order of the Delhi High Court dated</div><div>21.09.2020.</div><div>10. After the aforesaid settlement of the disputes, followed by its</div><div>implementation, SPML repudiated the Settlement Agreement and</div><div>filed the present application under Section 11(6) of the Act in the</div><div>Page 5 of 27</div><div>Delhi High Court on 10.10.20204. In this Arbitration Petition,</div><div>SPML alleged coercion and economic duress in the execution of the</div><div>Settlement Agreement. The allegation was, that the retention of the</div><div>Bank Guarantees compelled SPML to accept the terms of</div><div>Settlement Agreement. SPML also averred that NTPC had failed to</div><div>appoint an arbitrator in spite of repeated requests, and therefore</div><div>the High Court must constitute an Arbitral Tribunal, in exercise of</div><div>its jurisdiction under the Act.</div><div>11. In its reply to the Arbitration Petition, NTPC raised two-fold</div><div>objections. Firstly, that SPML failed to follow the mandatory prearbitration procedure of first referring the disputes to an</div><div>Adjudicator as per the terms of the Dispute Resolution Clause5.</div><div>4 Clause 6.2 of the General Conditions of Contract is as under:</div><div>“6.2 Arbitration</div><div>6.2.1 If either the Employer or the Contractor is dissatisfied with the Adjudicator’s</div><div>decision, or if the Adjudicator fails to give a decision within twenty eight (28) days of a</div><div>dispute being referred to it, then either the Employer or the Contractor may, within fifty</div><div>six (56) days of such reference, give notice to the other party, with a copy for information</div><div>to the Adjudicator of its intention to commence arbitration, as hereinafter provided, as</div><div>to the matter in dispute, and no arbitration in respect of this matter may be commenced</div><div>unless such notice is given.”</div><div>5 Dispute resolution was provided under clause 6.1 of the General Conditions of Contract and</div><div>clause 3 of Special Conditions of Contract; hereinafter ‘the Dispute Resolution Clause’;</div><div>Clause 6.1 of the General Conditions of Contract is as under:</div><div>“6. Settlement of Disputes</div><div>6.1 Adjudicator</div><div>6.1.1 If any dispute of any kind whatsoever shall arise between the Employer and the</div><div>Contractor in connection with or arising out of the Contract, including without</div><div>prejudice to the generality of the foregoing, any question regarding its existence, validity</div><div>or termination, or the execution of the Facilities- whether during the progress of the</div><div>Facilities or after their completion and whether before or after the termination,</div><div>abandonment or breach of the Contract- the parties shall seek to resolve any such</div><div>dispute or difference by mutual consultation. If the parties fail to resolve such a dispute</div><div>or difference by mutual consultation, then the dispute shall be referred in writing by</div><div>either party to the Adjudicator, with a copy to the other party.”</div><div>Page 6 of 27</div><div>Secondly, that the disputes between the parties were settled by</div><div>virtue of the Settlement Agreement dated 27.05.2020. Acting</div><div>under the Settlement Agreement, NTPC released the Bank</div><div>Guarantees and SPML also proceeded to withdraw the Writ</div><div>Petition, and therefore, there was discharge of the contract by</div><div>accord and satisfaction. The allegations of coercion and economic</div><div>duress were denied as false, as all events occurred during the</div><div>subsistence of proceedings before the Delhi High Court, and the</div><div>parties willingly complied with the terms of the Settlement</div><div>Agreement. Further, the demand of Rs. 72,01,53,899/- was an</div><div>afterthought, never raised during the subsistence of the contract.</div><div>Under these circumstances, NTPC submitted that the application</div><div>under Section 11(6) of the Act must be rejected.</div><div>12. High Court: The High Court examined the correspondence</div><div>between the parties in detail. It rejected the first contention of</div><div>NTPC that SPML should have first resorted to an alternative</div><div>dispute resolution mechanism under the Dispute Resolution</div><div>Clause. It noted that such a request was, in fact, made by SPML</div><div>on an earlier occasion, but NTPC failed to respond to the same. On</div><div>the request for arbitration and the allegation of economic duress</div><div>Page 7 of 27</div><div>that allegedly prevailed in signing the Settlement Agreement, the</div><div>High Court observed that:</div><div>“66. SPML had invoked the arbitration clause and had</div><div>sought reference of disputes to arbitration. It had also</div><div>approached this Court. Thus, it would be difficult for</div><div>SPML to establish that it was economically coerced to</div><div>enter into the Settlement Agreement. However, this Court</div><div>is unable to accept that the dispute whether the Contract</div><div>Agreement stood discharged/novated in terms of the</div><div>Settlement Agreement, is ex facie untenable,</div><div>insubstantial or frivolous.”</div><div> (emphasis supplied)</div><div>13. After referring to the decisions of this Court in Mayavati</div><div>Trading (P) Ltd. v. Pradyuat Deb Burman6, Vidya Drolia and Ors. v.</div><div>Durga Trading Corporation7, Duro Felguera, S.A. v. Gangavaram</div><div>Port Ltd.8, Sanjiv Prakash v. Seema Kukreja and Ors.9, and Oriental</div><div>Insurance Co. Ltd. and Anr. v. Dicitex Furnishing Ltd.10, the High</div><div>Court allowed the Arbitration Petition. It appointed a former Judge</div><div>of the Delhi High Court as the Arbitrator on behalf of NTPC, and</div><div>directed the respective arbitrators to appoint the presiding</div><div>Arbitrator.</div><div>14. Submissions by the Parties: Shri Adarsh Tripathi, Advocate</div><div>appearing with and on behalf of the Solicitor General, for NTPC,</div><div>6 (2019) 8 SCC 714.</div><div>7 (2021) 2 SCC 1. (hereinafter ‘Vidya Drolia’)</div><div>8 (2017) 9 SCC 729.</div><div>9 (2021) 9 SCC 732.</div><div>10 (2020) 4 SCC 621.</div><div>Page 8 of 27</div><div>submitted that the Settlement Agreement dated 27.05.2020 was</div><div>arrived at during the pendency of the Writ Petition before the High</div><div>Court. The allegations of coercion and economic duress were,</div><div>therefore, false and unbelievable. He also submitted that SPML</div><div>never raised claims during the subsistence of the contract, before</div><div>the Completion Certificate was issued, or even before the final</div><div>payment was made. Further, the conduct of SPML, in waiting for</div><div>the release of the Bank Guarantees as per the Settlement</div><div>Agreement before withdrawing the Writ Petition, and thereafter</div><div>instituting the Arbitration Petition, clearly demonstrated that the</div><div>allegation of coercion was not bona fide. Finally, he submitted that</div><div>the High Court was under an obligation to undertake a limited</div><div>scrutiny to examine whether a matter is prima facie arbitrable. For</div><div>this purpose, he relied on a recent decision of this Court in Emaar</div><div>India Ltd. v. Tarun Aggarwal Projects LLP & Anr11.</div><div>15. Shri Jaideep Gupta, Advocate appearing for the Respondent,</div><div>SPML, has submitted that the legal principles governing an</div><div>application under Section 11(6) of the Act are well-settled following</div><div>the decisions of this Court in Mayavati Trading (supra) and Vidya</div><div>Drolia (supra). At the pre-referral stage, the jurisdiction of the court</div><div>11 2022 SCC OnLine SC 1328.</div><div>Page 9 of 27</div><div>is restricted to the examination of whether an arbitration</div><div>agreement exists between the parties. He submitted that the</div><div>decision of the High Court was unexceptionable, since the question</div><div>as to whether the Settlement Agreement was executed under</div><div>undue influence or coercion could be determined by an Arbitral</div><div>Tribunal.</div><div>16. Position of Law: In the present case, we are concerned with</div><div>the pre-referral jurisdiction of the High Court under Section 11 of</div><div>the Act and would like to underscore the limited scope within</div><div>which an application under Section 11(6)12 of the Act has to be</div><div>considered.</div><div>17. The position of law with respect to the pre-referral</div><div>jurisdiction, as it existed before the advent of Section 11(6A) in the</div><div>Act, was based on a well-articulated principle formulated by this</div><div>Court in National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd13. In</div><div>Boghara Polyfab, this Court held that the issue of non-arbitrability</div><div>12 Arbitration and Conciliation Act 1996 (Act 26 of 1996), Section 11(6):</div><div>"(6) Where, under an appointment procedure agreed upon by the parties,—</div><div>(a) a party fails to act as required under that procedure; or</div><div>(b) the parties, or the two appointed arbitrators, fail to reach an agreement expected</div><div>of them under that procedure; or</div><div>(c) a person, including an institution, fails to perform any function entrusted to him</div><div> or it under that procedure, a party may request 1 [the Supreme Court or, as the</div><div>case may be, the High Court or any person or institution designated by such</div><div>Court]to take the necessary measure, unless the agreement on the appointment</div><div>procedure provides other means for securing the appointment.”</div><div>13 (2009) 1 SCC 267.</div><div>Page 10 of 27</div><div>of a dispute will have to be examined by the court in cases where</div><div>accord and discharge of the contract is alleged. Following the</div><div>principle in Boghara Polyfab, this Court in Union of India & Ors. v.</div><div>Master Construction Co.14 observed that when the validity of a</div><div>discharge voucher, no-claim certificate or a settlement agreement</div><div>is in dispute, the court must prima facie examine the credibility of</div><div>the allegations before referring the parties to arbitration. Yet again</div><div>in New India Assurance Co. Ltd. v. Genus Power Infrastructure</div><div>Ltd.15, this Court observed that allegations of fraud, coercion,</div><div>duress or undue influence must be prima facie substantiated</div><div>through evidence by the party raising the allegations.</div><div>14 (2011) 12 SCC 349:</div><div>“18. In our opinion, there is no rule of the absolute kind. In a case where the claimant</div><div>contends that a discharge voucher or no-claim certificate has been obtained by fraud,</div><div>coercion, duress or undue influence and the other side contests the correctness</div><div>thereof, the Chief Justice/his designate must look into this aspect to find out at least,</div><div>prima facie, whether or not the dispute is bona fide and genuine. Where the dispute</div><div>raised by the claimant with regard to validity of the discharge voucher or no-claim</div><div>certificate or settlement agreement, prima facie, appears to be lacking in credibility,</div><div>there may not be a necessity to refer the dispute for arbitration at all.”</div><div>15 (2015) 2 SCC 424:</div><div>“10. In our considered view, the plea raised by the respondent is bereft of any details</div><div>and particulars, and cannot be anything but a bald assertion. Given the fact that there</div><div>was no protest or demur raised around the time or soon after the letter of subrogation</div><div>was signed, that the notice dated 31-3-2011 itself was nearly after three weeks and</div><div>that the financial condition of the respondent was not so precarious that it was left</div><div>with no alternative but to accept the terms as suggested, we are of the firm view that</div><div>the discharge in the present case and signing of letter of subrogation were not because</div><div>of exercise of any undue influence. Such discharge and signing of letter of subrogation</div><div>was voluntary and free from any coercion or undue influence. In the circumstances,</div><div>we hold that upon execution of the letter of subrogation, there was full and final</div><div>settlement of the claim. Since our answer to the question, whether there was really</div><div>accord and satisfaction, is in the affirmative, in our view no arbitrable dispute existed</div><div>so as to exercise power under Section 11 of the Act. The High Court was not therefore</div><div>justified in exercising power under Section 11 of the Act.”</div><div>Page 11 of 27</div><div>18. In a legislative response to these precedents, through the</div><div>Arbitration and Conciliation (Amendment) Act 2015,16 sub-section</div><div>(6A) was added to Section 11 of the Act, which reads as follows:</div><div>“(6-A) The Supreme Court or, as the case may be, the</div><div>High Court, while considering any application under subsection (4) or sub-section (5) or sub-section (6), shall,</div><div>notwithstanding any judgment, decree or order of any</div><div>court, confine to the examination of the existence of an</div><div>arbitration agreement.”</div><div>(emphasis supplied)</div><div>19. Taking cognizance of the legislative change, this Court in</div><div>Duro Felguera (supra), noted that post the 2015 Amendments, the</div><div>jurisdiction of the court under Section 11(6) of the Act is limited to</div><div>examining whether an arbitration agreement exists between the</div><div>parties – “nothing more, nothing less”17.</div><div>20. However, in the year 2019, in United India Insurance Co. Ltd.</div><div>v. Antique Art Exports Pvt. Ltd.18, this Court had nevertheless</div><div>16 Arbitration and Conciliation (Amendment) Act 2015 (Act 3 of 2016); hereinafter referred to</div><div>as ‘the 2015 Amendments’.</div><div>17 Duro Felguera supra note 7, para 59 (concurring opinion of Kurian Joseph, J).</div><div>18 (2019) 5 SCC 362:</div><div>“21. In the instant case, prima facie no dispute subsisted after the discharge voucher</div><div>being signed by the respondent without any demur or protest and claim being finally</div><div>settled with accord and satisfaction and after 11 weeks of the settlement of claim a</div><div>letter was sent on 27-7-2016 for the first time raising a voice in the form of protest that</div><div>the discharge voucher was signed under undue influence and coercion with no</div><div>supportive prima facie evidence being placed on record in absence thereof, it must</div><div>follow that the claim had been settled with accord and satisfaction leaving no arbitral</div><div>dispute subsisting under the agreement to be referred to the arbitrator for</div><div>adjudication.</div><div>22. In our considered view, the High Court has committed a manifest error in passing</div><div>the impugned order and adopting a mechanical process in appointing the arbitrator</div><div>without any supportive evidence on record to prima facie substantiate that an arbitral</div><div>dispute subsisted under the agreement which needed to be referred to the arbitrator</div><div>for adjudication.”</div><div>Page 12 of 27</div><div>accepted an objection of ‘accord and satisfaction’ in opposition to</div><div>an application for reference to arbitration.</div><div>21. It did not take much time for this Court to reverse the</div><div>approach in Antique Art Exports (supra). A three-judge bench in</div><div>Mayavati Trading (supra) expressly overruled the above-referred</div><div>decision in Antique Art Exports, observing that:</div><div>“10. This being the position, it is clear that the law prior</div><div>to the 2015 Amendment that has been laid down by this</div><div>Court, which would have included going into whether</div><div>accord and satisfaction has taken place, has now been</div><div>legislatively overruled. This being the position, it is</div><div>difficult to agree with the reasoning contained in the</div><div>aforesaid judgment, as Section 11(6-A) is confined to the</div><div>examination of the existence of an arbitration agreement</div><div>and is to be understood in the narrow sense as has been</div><div>laid down in the judgment in Duro Felguera, SA.”</div><div>22. The entire case law on the subject was considered by a threejudge bench of this Court in Vidya Drolia (supra), and an</div><div>overarching principle with respect to the pre-referral jurisdiction</div><div>under Section 11(6) of the Act was laid down. The relevant portion</div><div>of the judgment is as follows:</div><div>“153. Accordingly, we hold that the expression</div><div>“existence of an arbitration agreement” in Section 11 of</div><div>the Arbitration Act, would include aspect of validity of an</div><div>arbitration agreement, albeit the court at the referral</div><div>stage would apply the prima facie test on the basis of</div><div>principles set out in this judgment. In cases of debatable</div><div>and disputable facts, and good reasonable arguable</div><div>case, etc., the court would force the parties to abide by</div><div>the arbitration agreement as the Arbitral Tribunal has</div><div>primary jurisdiction and authority to decide the disputes</div><div>Page 13 of 27</div><div>including the question of jurisdiction and nonarbitrability.</div><div>154. Discussion under the heading “Who Decides</div><div>Arbitrability?” can be crystallised as under:</div><div>154.1. Ratio of the decision in Patel Engg. Ltd. [SBP &</div><div>Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] on the scope of</div><div>judicial review by the court while deciding an application</div><div>under Sections 8 or 11 of the Arbitration Act, post the</div><div>amendments by Act 3 of 2016 (with retrospective effect</div><div>from 23-10-2015) and even post the amendments vide</div><div>Act 33 of 2019 (with effect from 9-8-2019), is no longer</div><div>applicable.</div><div>154.2. Scope of judicial review and jurisdiction of the</div><div>court under Sections 8 and 11 of the Arbitration Act is</div><div>identical but extremely limited and restricted.</div><div>154.3. The general rule and principle, in view of the</div><div>legislative mandate clear from Act 3 of 2016 and Act 33</div><div>of 2019, and the principle of severability and</div><div>competence-competence, is that the Arbitral Tribunal is</div><div>the preferred first authority to determine and decide all</div><div>questions of non-arbitrability. The court has been</div><div>conferred power of “second look” on aspects of nonarbitrability post the award in terms of sub-clauses (i), (ii)</div><div>or (iv) of Section 34(2)(a) or sub-clause (i) of Section</div><div>34(2)(b) of the Arbitration Act.</div><div>154.4. Rarely as a demurrer the court may interfere at</div><div>Section 8 or 11 stage when it is manifestly and ex facie</div><div>certain that the arbitration agreement is non-existent,</div><div>invalid or the disputes are non-arbitrable, though the</div><div>nature and facet of non-arbitrability would, to some</div><div>extent, determine the level and nature of judicial</div><div>scrutiny. The restricted and limited review is to check</div><div>and protect parties from being forced to arbitrate when</div><div>the matter is demonstrably “non-arbitrable” and to cut off</div><div>the deadwood. The court by default would refer the</div><div>matter when contentions relating to non-arbitrability are</div><div>plainly arguable; when consideration in summary</div><div>proceedings would be insufficient and inconclusive;</div><div>when facts are contested; when the party opposing</div><div>arbitration adopts delaying tactics or impairs conduct of</div><div>arbitration proceedings. This is not the stage for the court</div><div>to enter into a mini trial or elaborate review so as to usurp</div><div>the jurisdiction of the Arbitral Tribunal but to affirm and</div><div>uphold integrity and efficacy of arbitration as an</div><div>alternative dispute resolution mechanism.”</div><div> (emphasis supplied)</div><div>Page 14 of 27</div><div>23. The limited scope of judicial scrutiny at the pre-referral stage</div><div>is navigated through the test of a ‘prima facie review’. This is</div><div>explained as under:</div><div>“133. Prima facie case in the context of Section 8 is not to</div><div>be confused with the merits of the case put up by the</div><div>parties which has to be established before the Arbitral</div><div>Tribunal. It is restricted to the subject-matter of the suit</div><div>being prima facie arbitrable under a valid arbitration</div><div>agreement. Prima facie case means that the assertions</div><div>on these aspects are bona fide. When read with the</div><div>principles of separation and competence-competence and</div><div>Section 34 of the Arbitration Act, the referral court</div><div>without getting bogged down would compel the parties to</div><div>abide unless there are good and substantial reasons to</div><div>the contrary.</div><div>134. Prima facie examination is not full review but a</div><div>primary first review to weed out manifestly and ex facie</div><div>non-existent and invalid arbitration agreements and nonarbitrable disputes. The prima facie review at the</div><div>reference stage is to cut the deadwood and trim off the</div><div>side branches in straightforward cases where dismissal</div><div>is barefaced and pellucid and when on the facts and law</div><div>the litigation must stop at the first stage. Only when the</div><div>court is certain that no valid arbitration agreement exists</div><div>or the disputes/subject-matter are not arbitrable, the</div><div>application under Section 8 would be rejected. At this</div><div>stage, the court should not get lost in thickets and decide</div><div>debatable questions of facts. Referral proceedings are</div><div>preliminary and summary and not a mini trial…</div><div>…</div><div>138…On the other hand, issues relating to contract</div><div>formation, existence, validity and non-arbitrability would</div><div>be connected and intertwined with the issues underlying</div><div>the merits of the respective disputes/claims. They would</div><div>be factual and disputed and for the Arbitral Tribunal to</div><div>decide.</div><div>139. We would not like to be too prescriptive, albeit</div><div>observe that the court may for legitimate reasons, to</div><div>prevent wastage of public and private resources, can</div><div>exercise judicial discretion to conduct an intense yet</div><div>summary prima facie review while remaining conscious</div><div>that it is to assist the arbitration procedure and not usurp</div><div>jurisdiction of the Arbitral Tribunal. Undertaking a</div><div>detailed full review or a long-drawn review at the referral</div><div>stage would obstruct and cause delay undermining the</div><div>Page 15 of 27</div><div>integrity and efficacy of arbitration as a dispute</div><div>resolution mechanism. Conversely, if the court becomes</div><div>too reluctant to intervene, it may undermine effectiveness</div><div>of both the arbitration and the court. There are certain</div><div>cases where the prima facie examination may require a</div><div>deeper consideration. The court’s challenge is to find the</div><div>right amount of and the context when it would examine</div><div>the prima facie case or exercise restraint. The legal order</div><div>needs a right balance between avoiding arbitration</div><div>obstructing tactics at referral stage and protecting parties</div><div>from being forced to arbitrate when the matter is clearly</div><div>non-arbitrable.</div><div>140. Accordingly, when it appears that prima facie</div><div>review would be inconclusive, or on consideration</div><div>inadequate as it requires detailed examination, the</div><div>matter should be left for final determination by the</div><div>Arbitral Tribunal selected by the parties by consent. The</div><div>underlying rationale being not to delay or defer and to</div><div>discourage parties from using referral proceeding as a</div><div>ruse to delay and obstruct. In such cases a full review by</div><div>the courts at this stage would encroach on the</div><div>jurisdiction of the Arbitral Tribunal and violate the</div><div>legislative scheme allocating jurisdiction between the</div><div>courts and the Arbitral Tribunal. Centralisation of</div><div>litigation with the Arbitral Tribunal as the primary and</div><div>first adjudicator is beneficent as it helps in quicker and</div><div>efficient resolution of disputes.”</div><div> (emphasis supplied)</div><div>24. Following the general rule and the principle laid down in Vidya</div><div>Drolia (supra), this Court has consistently been holding that the</div><div>arbitral tribunal is the preferred first authority to determine and</div><div>decide all questions of non-arbitrability. In Pravin Electricals Pvt.</div><div>Ltd. v. Galaxy Infra and Engg. Pvt. Ltd.19, Sanjiv Prakash v. Seema</div><div>Kukreja and Ors.20, and Indian Oil Corporation Ltd. v. NCC Ltd.,</div><div>21</div><div>19 (2021) 5 SCC 671, paras 29, 30.</div><div>20 (2021) 9 SCC 732.</div><div>21 (2022) SCC OnLine SC 896.</div><div>Page 16 of 27</div><div>the parties were referred to arbitration, as the prima facie review</div><div>in each of these cases on the objection of non-arbitrability was</div><div>found to be inconclusive. Following the exception to the general</div><div>principle that the court may not refer parties to arbitration when</div><div>it is clear that the case is manifestly and ex facie non-arbitrable,</div><div>in BSNL and Anr. v. Nortel Networks India (P) Ltd.22 and</div><div>Secunderabad Cantonment Board v. B. Ramachandraiah & Sons23,</div><div>arbitration was refused as the claims of the parties were</div><div>demonstrably time-barred.</div><div>25. Eye of the Needle: The above-referred precedents crystallise</div><div>the position of law that the pre-referral jurisdiction of the courts</div><div>under Section 11(6) of the Act is very narrow and inheres two</div><div>inquiries. The primary inquiry is about the existence and the</div><div>validity of an arbitration agreement, which also includes an inquiry</div><div>as to the parties to the agreement and the applicant’s privity to the</div><div>said agreement. These are matters which require a thorough</div><div>examination by the referral court. The secondary inquiry that may</div><div>arise at the reference stage itself is with respect to the nonarbitrability of the dispute.</div><div>22 (2021) 5 SCC 738. (hereinafter ‘Nortel Networks’)</div><div>23 (2021) 5 SCC 705.</div><div>Page 17 of 27</div><div>26. As a general rule and a principle, the arbitral tribunal is the</div><div>preferred first authority to determine and decide all questions of</div><div>non-arbitrability. As an exception to the rule, and rarely as a</div><div>demurrer, the referral court may reject claims which are manifestly</div><div>and ex-facie non-arbitrable24. Explaining this position, flowing from</div><div>the principles laid down in Vidya Drolia (supra), this Court in a</div><div>subsequent decision in Nortel Networks (supra) held25:</div><div>“45.1 ...While exercising jurisdiction under Section 11 as</div><div>the judicial forum, the court may exercise the prima facie</div><div>test to screen and knockdown ex facie meritless,</div><div>frivolous, and dishonest litigation. Limited jurisdiction of</div><div>the courts would ensure expeditious and efficient</div><div>disposal at the referral stage. At the referral stage, the</div><div>Court can interfere “only” when it is “manifest” that the</div><div>claims are ex facie time-barred and dead, or there is no</div><div>subsisting dispute...”</div><div>27. The standard of scrutiny to examine the non-arbitrability of</div><div>a claim is only prima facie. Referral courts must not undertake a</div><div>full review of the contested facts; they must only be confined to a</div><div>primary first review26 and let facts speak for themselves. This also</div><div>requires the courts to examine whether the assertion on</div><div>arbitrability is bona fide or not.</div><div>27 The prima facie scrutiny of the</div><div>facts must lead to a clear conclusion that there is not even a vestige</div><div>24 Vidya Drolia supra note 7, para 154.4.</div><div>25 Nortel Networks supra note 22, para 45.1.</div><div>26 Vidya Drolia supra note 7, para 134.</div><div>27 ibid.</div><div>Page 18 of 27</div><div>of doubt that the claim is non-arbitrable.</div><div>28 On the other hand, even</div><div>if there is the slightest doubt, the rule is to refer the dispute to</div><div>arbitration29.</div><div>28. The limited scrutiny, through the eye of the needle, is</div><div>necessary and compelling. It is intertwined with the duty of the</div><div>referral court to protect the parties from being forced to arbitrate</div><div>when the matter is demonstrably non-arbitrable30. It has been</div><div>termed as a legitimate interference by courts to refuse reference in</div><div>order to prevent wastage of public and private resources31. Further,</div><div>as noted in Vidya Drolia (supra), if this duty within the limited</div><div>compass is not exercised, and the Court becomes too reluctant to</div><div>intervene, it may undermine the effectiveness of both, arbitration</div><div>and the Court32. Therefore, this Court or a High Court, as the case</div><div>may be, while exercising jurisdiction under Section 11(6) of the</div><div>Act, is not expected to act mechanically merely to deliver a</div><div>purported dispute raised by an applicant at the doors of the chosen</div><div>28 Nortel Networks supra note 22, para 47.</div><div>29 Vidya Drolia supra note 7, para 154.4.</div><div>30 ibid para 154.4.</div><div>31 ibid para 139.</div><div>32 ibid.</div><div>Page 19 of 27</div><div>arbitrator33, as explained in DLF Home Developers Limited v.</div><div>Rajapura Homes Pvt. Ltd.</div><div>29. Analysis: We will now proceed to apply these principles to</div><div>the present case and examine the arbitrability of the dispute by</div><div>undertaking a prima facie review of the basic facts.</div><div>30. SPML duly completed the stipulated work under the subject</div><div>contract, and a Completion Certificate was issued by NTPC on</div><div>27.03.2019. SPML sought the release of the final payment, and</div><div>NTPC, by its letter dated 10.04.2019, agreed to release the same.</div><div>31. A No-Demand Certificate was issued by SPML on</div><div>12.04.2019, and the final payment was released by April 2019.</div><div>There is nothing on record about any pending claims of SPML</div><div>during the subsistence of the contract or till the release of the final</div><div>payment. This is evident from the Writ Petition as well as the</div><div>Arbitration Petition under Section 11 of the Act.</div><div>32. While NTPC released the final payment, on 14.05.2019, it</div><div>justified the withholding of SPML’s Bank Guarantees on the</div><div>33 DLF Home Developers Limited v. Rajapura Homes Pvt. Ltd 2021 SCC OnLine SC 781, paras</div><div>18, 20.</div><div>Page 20 of 27</div><div>ground that there are certain disputes between the parties with</div><div>respect to other projects.</div><div>33. Objecting to the stand of NTPC by its letter dated</div><div>15.05.2019, SPML stated that linking the Bank Guarantees with</div><div>claims under other projects was unjustified. In turn, SPML raised</div><div>a claim of Rs. 72,01,53,899/- against NTPC. At the same time,</div><div>SPML also sought the appointment of an “Adjudicator” to settle</div><div>these claims.</div><div>34. It is in the above-referred context that SPML filed the Writ</div><div>Petition before the High Court on 03.07.2019. The prayer in the</div><div>Writ Petition, particularly in the context of the huge claim raised</div><div>on 15.05.2019, assumes importance. The prayer is reproduced</div><div>herein below for ready reference:</div><div>“(a) Pass an appropriate Writ, Order or Direction</div><div>quashing the e-mail dated 14.05.2019 issued by the</div><div>Respondent insofar as it pertains to the release of the</div><div>Bank Guarantees being (a)0040ILG002609, (b)</div><div>0040ILG001109, (c)0040ILG001209, (d)</div><div>0040ILG001309 and direct the Respondent to release the</div><div>aforesaid Bank Guarantees forthwith, ...”</div><div>35. There is no reference to the claim of Rs.72,01,53,899/- in</div><div>the body or the Prayer of the Writ Petition. Conspicuously, the Writ</div><div>Petition is confined to seeking a direction to return the Bank</div><div>Guarantees.</div><div>Page 21 of 27</div><div>36. Pending disposal of the Writ Petition, the High Court, by an</div><div>interim order dated 08.07.2019, directed NPTC not to invoke the</div><div>Bank Guarantees. The interim order was subject to SPML keeping</div><div>the Bank Guarantees alive. The relevant portions of the order are:</div><div>“…</div><div>2. Issue notice. The learned counsel appearing for the</div><div>respondent accepts notice.</div><div>3. Admittedly, the contract pursuant to which the bank</div><div>guarantees in question had been furnished has been</div><div>completed and there is no dispute that the petitioner’s</div><div>performance of the contract was satisfactory. The</div><div>petitioner also claims that it has received the entire</div><div>consideration for the same. The petitioner’s claims that</div><div>the release of the bank guarantees is being withheld</div><div>contrary to the terms of the contract between the parties,</div><div>in order to pressurize the petitioner in respect of certain</div><div>disputes in relation to other contracts, which are pending</div><div>adjudication before the Arbitral Tribunal.</div><div>…</div><div>6. In the meanwhile, the respondents are restrained from</div><div>invoking the bank guarantees, subject to the petitioner</div><div>keeping the same alive.”</div><div>37. On 23.07.2019, SPML sent a Notice to NTPC, intimating its</div><div>intention to invoke Arbitration under the Dispute Resolution</div><div>Clause.</div><div>38. During the pendency of the Writ Petition, the parties engaged</div><div>themselves in multiple discussions about their claims and</div><div>counter-claims. All that culminated in the Settlement Agreement</div><div>dated 27.05.2020. The Terms of the Settlement Agreement are as</div><div>follows:</div><div>Page 22 of 27</div><div>“NOW THEREFORE, in consideration of the premises and</div><div>mutual promises contained herein, the parties agree as</div><div>follows:</div><div>1. That the Agency undertakes to withdraw WP No.</div><div>7213/2019 filed in the Hon’ble High Court upon</div><div>execution of the present agreement immediately upon</div><div>receipt of original Bank Guarantees stated herein below</div><div>lying with NTPC as mentioned herein below at Para 4.</div><div>2. That the Agency has agreed not to initiate any further</div><div>proceedings in relation with the present contract</div><div>agreement and work executed by the Agency, of any</div><div>nature whatsoever. Further, the Agency has undertaken</div><div>not to raise any claim of any nature whatsoever against</div><div>the NTPC Ltd. in relation with the present contract</div><div>agreement and work executed by the Agency, be it</div><div>Arbitration proceedings, civil suit, writ petition, or any</div><div>other proceedings before any judicial or quasi-judicial</div><div>forum.</div><div>3. That the Agency has confirmed it has received entire</div><div>payments arising out of the present contract and the</div><div>same stands closed, and no further sum/money is</div><div>payable to the Agency in any manner whatsoever by</div><div>NTPC Ltd. under the subject contract.</div><div>…</div><div>5. That NTPC Ltd. has further agreed not to raise any</div><div>contempt proceedings against the Agency for not keeping</div><div>alive the BGs as directed by the Hon’ble High Court of</div><div>Delhi in pending Writ Petition.”</div><div><br /></div><div>39. In compliance with the Settlement Agreement, NTPC</div><div>released the Bank Guarantees on 30.06.2020, which were the</div><div>subject matter of the pending Writ Petition.</div><div>40. It is noteworthy that the Bank Guarantees expired on</div><div>19.11.2019 and 16.12.2019, despite the specific direction by the</div><div>High Court to SPML to keep its Bank Guarantees alive. However,</div><div>in compliance with its express undertaking in the Settlement</div><div>Page 23 of 27</div><div>Agreement, NTPC did not file any contempt proceedings against</div><div>SPML.</div><div>41. Following the release of the Bank Guarantees as per the</div><div>Settlement Agreement, SPML withdrew the Writ Petition, as</div><div>recorded by the High Court in its Order dated 21.09.2020.</div><div>42. One month later, on 10.10.2020, SPML filed the Arbitration</div><div>Petition under Section 11(6) of the Act alleging coercion and</div><div>economic duress in the execution of the Settlement Agreement. It</div><div>was also alleged that the Settlement Agreement was repudiated on</div><div>22.07.2020 through SPML’s letter to NTPC, disputing the</div><div>Settlement Agreement.</div><div>43. In its reply to the Arbitration Petition, NTPC specifically</div><div>pointed out that SPML never raised any claims with respect to the</div><div>dues amounting to Rs. 72,01,53,899/- during the pendency of the</div><div>contract, and that the allegations of coercion and economic duress</div><div>are completely false. NTPC alleged that the Arbitration Petition</div><div>lacked bona fide.</div><div>44. A simple narration of the bare facts, as indicated above,</div><div>leads us to conclude that the allegations of coercion and economic</div><div>duress are not bona fide, and that there were no pending claims</div><div>Page 24 of 27</div><div>between the parties for submission to arbitration. The</div><div>Respondent’s claim fits in the description of an attempt to initiate</div><div>“ex facie meritless, frivolous and dishonest litigation”</div><div>34. We will</div><div>endeavor to give reasons for our conclusion.</div><div>45. The whole dispute revolves around the solitary act of the</div><div>Appellant, NTPC, in not returning the Bank Guarantees despite</div><div>the successful completion of work. This continued even after SPML</div><div>issued the No-Demand Certificate and NTPC released the final</div><div>payment. These undisputed facts led to the institution of the Writ</div><div>Petition before the Delhi High Court. There were no allegations of</div><div>coercion or economic duress compelling SPML to withdraw any</div><div>pending claims under the subject contract as a condition for the</div><div>return of the Bank Guarantees. On the contrary, the only</div><div>allegation by SPML was with respect to NTPC’s “illegal” action of</div><div>interlinking the release of the Bank Guarantees with some other</div><div>contracts. This was precisely the argument before the High Court,</div><div>and, in fact, this submission is recorded by the High Court while</div><div>issuing notice and injuncting NTPC. This fact clearly indicates that</div><div>34 Vidya Drolia supra note 7, para 147.11.</div><div>Page 25 of 27</div><div>the plea of coercion and economic duress leading to the Settlement</div><div>Agreement is an afterthought.</div><div>46. We will now examine whether the allegations of coercion and</div><div>economic duress in the execution of the Settlement Agreement are</div><div>bona fide or not. This inquiry has a direct bearing on the</div><div>arbitrability of the dispute. It was during the subsistence of the</div><div>Writ Petition and the High Court’s interim order, when SPML had</div><div>complete protection of the Court, that the parties entered into the</div><div>Settlement Agreement. This agreement was comprehensive. It inter</div><div>alia provided for (i) the release of Bank Guarantees by NTPC, (ii)</div><div>the withdrawal of SPML’s Writ Petition, (iii) restraining NTPC from</div><div>filing contempt proceedings against SPML for letting the Bank</div><div>Guarantees expire, and finally, (iv) restraining SPML from</div><div>initiating any proceedings under the subject contract, including</div><div>arbitration. The Settlement Agreement also recorded that there</div><div>were no subsisting issues pending between the parties.</div><div>47. The plea of coercion and economic duress must be seen in</div><div>the context of the execution of the Settlement Agreement not being</div><div>disputed, and its implementation leading to the release of the Bank</div><div>Guarantees on 30.06.2020 also not being disputed. Almost three</div><div>weeks after the release of the Bank Guarantees, a letter of</div><div>Page 26 of 27</div><div>repudiation was issued by SPML on 22.07.2020. This letter was</div><div>issued about two months after the Settlement Agreement was</div><div>executed and in fact during the subsistence of the Writ Petition.</div><div>After reaping the benefits of the Settlement Agreement, the Writ</div><div>Petition was withdrawn on 21.09.2020. It is thereafter that the</div><div>present application under Section 11(6) of the Act was filed. The</div><div>sequence of events leads us to conclude that the letter of</div><div>repudiation was issued only to wriggle out of the terms of the</div><div>Settlement Agreement.</div><div>48. The foregoing clarifies beyond doubt that the claims sought</div><div>to be submitted to arbitration were raised as an afterthought.</div><div>Further, SPML’s allegations of coercion and economic duress in</div><div>the execution of the Settlement Agreement lack bona fide. They are</div><div>liable to be knocked down as ex facie frivolous and untenable.</div><div>49. In view of the above-referred facts, which speak for</div><div>themselves, we are of the opinion that this is a case where the High</div><div>Court should have exercised the prima facie test to screen and</div><div>strike down the ex-facie meritless and dishonest litigation. These</div><div>are the kinds of cases where the High Court should exercise the</div><div>restricted and limited review to check and protect parties from</div><div>being forced to arbitrate.</div><div>Page 27 of 27</div><div>50. Accordingly, we have no hesitation in holding that the High</div><div>Court has committed an error in allowing the application under</div><div>Section 11(6) of the Act. High Court ought to have examined the</div><div>issue of the final settlement of disputes in the context of the</div><div>principles laid down in Vidya Drolia (supra).</div><div>51. For the reasons stated above, the decision of the High Court</div><div>of Delhi in Arbitration Petition No. 477 of 2020, dated 08.04.2021,</div><div>is set aside, and Civil Appeal No. 4778 of 2022 stands allowed.</div><div>52. The parties shall bear their own costs.</div><div>....................................CJI.</div><div>[Dr Dhananjaya Y Chandrachud]</div><div>........................................J.</div><div>[Pamidighantam Sri Narasimha]</div><div>New Delhi;</div><div>April 10, 2023</div>Unknownnoreply@blogger.com0